Zalando to enter two new markets in Europe

German online fashion retailer Zalando said on Thursday it would keep growing rapidly in 2018, expanding to another two countries and adding another 2,000 jobs, although heavy investment would weigh on profitability.

Launched in Berlin in 2008, Zalando has grown fast to sell almost 2,000 brands in 15 countries, mostly in western Europe, but has not added a new market since Luxembourg in 2013.

Zalando said the two new markets would be adjacent to its current ones but a spokesman said it had not yet decided on which new countries to target.

Zalando said it again aimed for sales growth of 20 to 25 percent in 2018 after a 23.4 percent rise in 2017, and add about 2,000 jobs to its total of 15,000, most in Berlin, where it is due to open a new headquarters later this year.

It is targeting a margin on adjusted earnings before interest and taxation (EBIT) of around 4 to 5 percent, compared with the 4.8 percent it recorded in 2017.

Zalando said it would keep investing heavily, including in building new warehouses and automating existing ones as well as increasing the personalisation of its website. It also plans to add beauty products to its offering from late March.

It expects capital expenditure in 2018 of about 350 million euros ($427 million), up from 244 million in 2017, excluding mergers and acquisitions.

British rival ASOS last month beat expectations for sales growth over Christmas and said it sees potential for e-commerce to expand to as much as 40 percent of all clothing sales in developed markets as it stuck to a target for sales growth of 25 to 30 percent.