Zalando Confirms Earnings Boost From Efficiency and New Brands

FRANKFURT, Germany — Zalando SE boosted earnings as the online apparel retailer added new brands like Kate Spade and got more bang for its marketing buck.

Adjusted earnings before interest and taxes amounted to €80.9 million ($90.3 million) in the second quarter, Berlin-based Zalando said in a statement Thursday. That compares with €30.2 million a year earlier. The company said July 19 that earnings would probably be in the range of €68 million to €88 million. The shares rose as much as 2.1 percent in early Frankfurt trading.

Zalando has has seen its profitability dwindle in the past year as it increased spending on technology and marketing. Investor concern was eased when it raised its full-year margin forecast to 4 percent to 5.5 percent last month, lifting the range from 3 percent to 4.5 percent. Zalando, which sells products like Nike sneakers and Armani coats, has broadened its assortment with brands like Fenty by Rihanna, Club Monaco and Kate Spade.

“We think Zalando’s top line in the second quarter benefited from new ranges, the reversal of the negative Easter impact, wetter weather and more targeted advertising campaigns during the quarter, as well as the general structural shift towards online,” Claire Huff, an analyst at RBC Capital Markets in London, wrote in a note.

The company’s operating profit margin widened to 8.4 percent in the quarter, it said. Sales rose 25 percent to €916.4 million, in line with Zalando’s preliminary estimate. The online retailer also reiterated its forecast for full-year sales growth at the upper end of a 20 to 25 percent range.

By Corinne Gretler; editor: Matthew Boyle.