Zalando Q4 profits beat expectations, up 33 per cent

Zalando’s profits for the fourth quarter beat expectations, though revenues were lower than analysts predicted and net income took a hit, as the online fashion retailer said it planned to create more than 2,000 jobs this year.

Adjusted earnings before interest and tax in the last three months of 2016 were up 33 per cent compared to the same period the previous year, hitting €95.6m, ahead of analysts’ expectations of €82.8m.

Fourth quarter revenues at the fashion company were slightly softer than expected, however, at €1.09bn against expectations of €1.12bn. The growth rate of 25.7 per cent from the same period the previous year was slower than the 30.5 per cent growth rate in the fourth quarter of 2015.

Zalando had warned in preliminary figures in January that revenues would be lower than expected – however, the final figure for adjusted ebit was at the higher end of the range predicted last month.

Net income also took a hit, dropping 42 per cent in the fourth quarter to €60m compared with the same period in 2015. Net income for 2016 as a whole was down slightly, slipping less than 1 per cent to €120.5m.

Zalando said its increased profitability was due to improved operating costs, reflecting strong cost management and general efficiency improvements.

The European start-up said about 20 million customers shopped at the online retailer in 2016 – an uptick of 11 per cent from the previous year. It said it would create more than 2,000 jobs this year as it continues to expand.

But it warned revenue growth this year could be lower than 2016′s overall growth rate of 23 per cent, with group revenues rising to €3.64bn last year. Revenue growth in 2017 is expected to be between 20-25 per cent.