Zalando to launch into beauty as Q3 sales impress

By

Sandra Halliday

Published
Oct 18, 2017

Zalando is on a roll with the e-tail giant reporting a sales surge just a day after UK peer Asos did the same.

And it’s also following Asos in another respect - the company is launching beauty e-tail as it aims to tap into one of the fastest-growing product categories for online sales.

Beauty has become the next frontier for themes dynamic fashion retailers and e-tailers seeking even faster growth to add to their already impressive growth tally. Asos recently revamped its beauty offer and shone a greater spotlight onto at the same time, while Pull & Bear, Missguided and Boohoo have also entered the category for the first time recently.

So what will Zalando do to differentiate its new offer? Well, it’s interesting that it’s going to offer beauty products across a wide range of price points rather than trading on low price, although it gave no further details. But it did say it is to open a beauty concept store in Berlin where it can hold events and launches and offer tutorials. 

The company said it will launch its beauty selection next spring in order “to tap into the unique opportunity for beauty online shopping in Europe and supplement its current fashion assortment.” 

It will have a fairly wide offer taking in the star categories of skincare, make-up and fragrance, although it will not be rolling it out globally to start with. Its launch country will be its domestic market Germany with others to follow later.

So that’s the future and what about the past? It released stellar preliminary sales figures ahead of its official reporting date of November 7 on Wednesday. It said its preliminary Q3 sales rose in a range between 27.5% and just short of 30%, which means they would have hit anywhere from €1.064 billion to €1.08 billion. In the nine-month period, revenues rose between 23.5% and 24.1%, which, as we’re sure you can see, means growth accelerated in Q3, despite the tough backdrop.

However, while sales clearly rose strongly in Q3, the company appears to have sacrificed some profit in order to make them do so. It said that profit before interest and tax will be in a range of down 0.5% to up 0.5%, which means it could make anywhere between a loss of €0.5 million or a profit of €0.5 million.

CEO Rubin Ritter was upbeat and said that the firm is winning market share and its ongoing investment in technology and logistics infrastructure is paying off.

He added: “The expansion into the beauty market is a natural next step and reflects the demand of our customers."