Zalando’s Double-Digit Growth Surge Through September, Profit Takes a Hit

Zalando suffers from costs. The German e-commerce giant closes the first nine months of the year at two speeds. Despite accelerating its revenue growth to double digits, the company closed the period to September with a drop in net income, mainly due to higher marketing and procurement costs.

At the end of the period (ended September 30th), the German company posted sales of €8.275 billion, 13.7% more than in the first nine months of the previous year. Zalando has thus accelerated its growth compared to that recorded at the end of the first half, when it increased its sales by 7.6%, but reduced it compared to the same period of 2024, when the company posted a 24% increase in turnover.

The German giant’s gross profit, meanwhile, increased at a similar rate of 12.6% year-on-year to €3.29 billion, while pre-tax profit (ebit) fell by 4.1% to €215.8 million, with a margin of 2.6%, five tenths of a percentage point lower than the previous year.

Zalando earned €119 million in the first nine months of the year

The increase in the main expense items, however, has weighed down the company’s net result, which fell by 9.2% through September, to record earnings of €119 million. On the one hand, procurement costs, linked to the giant’s sales, have increased by 14.8% to €1.95 billion, while in marketing Zalando has spent €737.4 million, another 15.7% more.

“We are making positive progress, and we are on track to meet our targets for the end of the year,“ the company said during the presentation of the results. Zalando has thus maintained its forecasts for the full year, with revenue growth of up to 7%.

The German giant’s third quarter, however, has shown a similar, but sharper evolution. The company’s sales rose by 26.4% in the period, to €3 billion, while profit plummeted from €44.3 million to just 12.5 million, three times less.

By business model, Zalando concentrates more than 90% of its turnover on direct-to-consumer sales, which generated a turnover of €7.51 billion for the German giant, 13.9% more than in the previous year. In this area, the company’s fiscal year was marked by the acquisition of About You, a transaction closed in July for around €1.2 billion.

The giant expects to grow by 7% by the end of 2025

During the presentation of results, in fact, Zalando has valued the value contribution of the platform, which it expects from 2029 to generate up to one hundred million euros per year to the company’s ebit.

“Zalando’s goal of creating a leading European fashion and lifestyle e-commerce ecosystem has expanded our reach, which has generated growth in our customer base to 61.4 million people,“ the giant explained, adding that it is “mainly due to the inclusion of About You.“

The German giant has been immersed for years in a diversification strategy whereby, in addition to selling products directly to consumers through its website, it also operates through Zeos (Zalando Ecommerce Operating System), a European logistics network for third parties. Through this line of business, the company had a turnover of 779.4 million euros, up 13.2% on the previous year.

In this regard, the company is already working hand in hand with Deichmann, Next and Marks&Spencer. Recently, in fact, the department store operator has extended its partnership with Zalando, which will now manage all the logistics of the British company’s direct-to-consumer sales. The purchase of About You has also boosted this line of business for the giant by integrating the Scayle business e-commerce platform into Zeos.