Strong growth, less profitability for Zalando

Growth for Zalando has slowed down from the pandemic highs. However, growth is still on a very robust level of +23,4%. Compared to Amazon’s +4% growth for product sales, Zalando’s growth is very good.

As the retail markets in Europe are normalising, the profits for Zalando are also normalising. The Q3/2021 produced negative EBIT of -4,6M€, similarly to many other third quarters. In general third quarter seems to be the least profitable quarter of the year for Zalando.

Profits were down due to slightly lower margins, higher inventories (preparing for Christmas) and increased marketing costs. The marketing cost increased as Zalando invested in customer acquisition, especially in new markets around Central and Eastern Europe.

This also leads to the fact that the core DACH markets are the profit generator for Zalando. DACH countries are only 44,5% of revenue (less than 50% since Q2/2018), but provide profits when the other markets are unprofitable due to the investments to grow.