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FRANKFURT, Germany — Zalando SE, Europe's largest online shoe and fashion retailer, reported a second-quarter profit of 35 million euros ($46 million), giving investors more evidence the company is controlling costs ahead of a potential initial public offering.
Earnings before interest and taxes broke into the black compared with a loss at that level of 31 million euros in the year-earlier period, the company said today in a statement. Sales rose 25 percent to 546 million euros.
“We made a very, very big advance in margin,” management board member Rubin Ritter said in an interview. “We improved all our cost positions.”
The seller of garments ranging from from $2,000 designer dresses to Adidas AG German soccer jerseys may list between 10 percent and 15 percent of its shares in an IPO that could value it at 4 billion euros to 5 billion euros, people with knowledge of the matter have said. Zalando is grappling with high costs relative to its sales and a return rate of 50 percent.
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Ritter said Zalando benefited from lower marketing and fulfillment costs as it built a loyal customer base and ramped up a new German distribution center. The company also had less discounting. Yet e-commerce companies “have to live with” high return rates as customers expect the convenience, he said.
The company, created from the Berlin-based Samwer brothers’ Rocket Internet Rocket Internet incubator, has picked Credit Suisse Group AG, Goldman Sachs Group Inc. and Morgan Stanley to manage the IPO, people familiar with the matter have said. Its investors include Sweden’s Investment AB Kinnevik and the Samwers.
Rocket is also planning to announce its own share sale soon, people familiar with the matter have told Bloomberg News, signaling a revival in German IPOs.
In a preliminary report, Zalando previously said second- quarter revenue was in a range of 520 million euros to 560 million euros. The company may post full-year sales of 2.4 billion euros, Kepler Cheuvreux estimates.
Zalando plans to hold an event for reporters in Berlin later today where managing directors Ritter, David Schneider and Robert Gentz plan to speak. The company has said it plans to discuss its finances, technology, operations and marketing.
By Aaron Ricadela; editors: Celeste Perri, Thomas Mulier.
