BERLIN — Earlier this month German online retailing giant Zalando finalized its takeover of About You, another online shopping platform based out of Hamburg.
Although smaller than Zalando, About You is still one of the country’s largest online fashion retailers, catering to a more youthful audience of around 13 million customers and bringing in annual revenue of about 2 billion euros.
“The successful completion of the transaction represents another significant milestone in our journey to build a pan-European ecosystem,” Zalando co-chief executive officer Robert Gentz said.
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Although About You will continue to operate independently, Gentz explained that Zalando will eventually delist the company, founded in 2014 and worth an estimated 1.13 billion euros, from the stock market and make it part of the Zalando group.
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As a result of the merger being approved and finalized in July, Zalando adjusted its guidance for the full year.
The company had a positive second quarter, with group revenues rising 7.3 percent to 2.83 billion euros over the three-month period. That brings Zalando‘s group revenues for the year so far to 5.25 billion euros, an increase of 7.6 percent compared to the same period last year.
The company’s gross merchandise value, or GMV, also rose 5 percent to 4.06 billion euros between April and June. GMV measures how much inventory the platform has moved and is usually higher than company revenue.
“This is a strong result given the current geopolitical and macroeconomic environment,” Gentz said at a press conference in Germany on Wednesday morning. “Despite operating in a volatile market, we are confident on delivering a strong second half [of the year]. The first half shows that even in this environment, there are pockets of growth and we are able to find them.”
Zalando now expects revenues for the newly combined group to grow between 14 percent and 17 percent over the full year, and GMV to grow between 12 percent and 15 percent. The double-digit growth comes because of the addition of About You.
This should amount to revenues of 12.1 billion to 12.4 billion euros for the full year, and GMV between 17.2 billion and 17.6 billion euros.
However, Gentz continued, if one assumed About You had been part of the Zalando group last year as well, then 2025 guidance for revenue growth drops back to between 4 percent and 7 percent over the full year.
About You had only predicted “moderate growth” for itself this year. Previously, Zalando expected between 4 percent and 9 percent growth for its own operations.
The reason for the lower top-of-the-range in the new guidance is due mainly to economic uncertainties, a spokesperson told WWD in an statement.
Zalando now expects mid-single-digit growth for the entire group in the second half of the year. The original higher-end guidance of 9 percent growth “implied a growth acceleration of more than 10 percent in the second half of 2025,” the spokesperson said, “which we consider less likely given the current market environment and current trading dynamics.”
Although uncertainty around U.S. tariffs is impacting other German brands that export to America, Zalando is a mostly European retailer and hasn’t seen any immediate impact yet, the company’s executives reported.
“In terms of first order effects of tariffs, there are no implications,” they explained. “But obviously, second order effects might come in the longer term — for instance, on consumer sentiment.”
Over the second quarter, Zalando’s active customers increased by 6.1 percent to 52.9 million, orders at Zalando also grew 2.5 percent to 65 million, and the average value of each basket rose 1.2 percent to just over 61 euros per purchase.
As a result of Zalando’s push to provide more entertaining content, people are also spending longer on the platform, Gentz pointed out.
This week, Zalando replaced its traditional homepage with an “AI-powered discovery feed” for consumers, he noted. The platform will be using advanced algorithms to make shopping “more immersive and more entertaining.” The busy, scroll-able homepage on the Zalando mobile app includes personalized product recommendations, inspirational campaigns, creator content and social media.
“The feed updates regularly with fresh content, keeping customers engaged and coming back,” Gentz said. “It also introduces new high impact formats for partners to reach audiences.”
And as consumers interact with the new personalized pages, Zalando will also be harvesting their data. “[This] will allow us to leverage AI to drive up personalization and relevancy for users,” Gentz said.
Last year Zalando launched what it calls its “ecosystem strategy.” This basically splits the business into consumer sales via the existing homepage and app, and business-to-business, or B2B, activities.
B2B allows retailers to sell via Zalando and to utilize the group’s marketing, data and logistics services, among other things. For example, Zalando co-chief executive officer David Schroeder noted, U.K.-based retailer Next has been using Zalando’s fulfillment services in Germany since February and will soon expand that to other European markets.
At the moment, the B2B side of the company is growing faster than the consumer one. Over the second quarter, B2B revenues grew 12.2 percent to total 262.4 million euros. Although Zalando has previously predicted B2B will become a multibillion-euro business for the group, that figure is currently still dwarfed by consumer revenues, which grew 6.8 percent and totaled 2.41 billion euros in the quarter.
In another bright spot on the balance sheet, Zalando’s adjusted EBIT — earnings before interest and taxes and considered an important indicator of day-to-day profitability — rose 8.1 percent to 185.5 million euros. In recent years, Zalando worried investors with its EBIT numbers because of the costs involved with this kind of retailing, but the company seems to have resolved this issue for now.
For the full year, Zalando expects adjusted EBIT to come in somewhere between 550 million and 600 million euros.
The second-quarter results were broadly in line with market expectations. Analysts from the likes of JP Morgan, Deutsche Bank and investment bank Jefferies expressed some concern about the second half of the year, though, noting more discounting, high inventories and lagging consumer sentiment. That kind of skepticism saw Zalando shares drop 10 percent in value in Wednesday trading in Germany.