Editor’s Note: This article was updated at 3 p.m. EST
BERLIN – After a successful 2025, German online giant Zalando is taking further steps toward becoming even more of a provider of infrastructure, software and data to the fashion sector.
The retailer plans to expand its profit margin through increased use of artificial intelligence and via synergies created through last year’s purchase of another German online store, About You.
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“Fueled by our strategy and the acquisition of About You, we significantly accelerated our financial performance in 2025,” David Schroeder, co-chief executive officer at Zalando, said at a Thursday morning press conference livestreamed from the firm’s Berlin headquarters. “This strong set of results demonstrates the strength of our business model, with further acceleration expected this year.”
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In the fourth quarter of last year, Zalando revenues rose 23 percent to 4.07 billion euros. That led to a 16.8 percent increase over the full year, and 12.35 billion euros in revenue.
Zalando acquired About You in the third quarter. Prior to that, its revenues had been increasing around 7.6 percent on average every quarter in 2025. During Thursday’s press conference, chief financial officer Anna Dimitrova confirmed that, without About You, Zalando’s consumer retail business would have grown in the midsingle digits in 2025.
Zalando’s EBIT, or earnings before interest and taxes and an important indicator of profitability, has also grown. In the past, Zalando has been able to generate revenue but due to the expensive demands of online retailing, found it difficult to make a profit. During 2025, Zalando’s EBIT rose 15.6 percent to 591 million euros and market analysts from the likes of Goldman Sachs and RBC noted that this was above expectations.
Although EBIT rose, the company’s profit margin — that is, how much profit it actually made compared to sales — remained stable at 4.8 percent. Zalando’s profit margin has been rising steadily over the past few years but it was also at 4.8 percent in 2024.
Zalando counted 62 million active customers for its various offerings, online and via apps. Again, the purchase of About You contributed a significant amount to that number — around the middle of last year, Zalando had 52.9 million active customers.
But there were also other benefits to the acquisition. About You brought with it proprietary sales software called Scayle. On Thursday, Zalando revealed that Scayle would become the global commerce platform for denim brand Levi’s across the U.S., Canada and Europe.
In the past there has been speculation about Zalando expanding its consumer business into the U.S.
“It [the Levi’s partnership] shows the technology platform we built is truly borderless,” Schroeder told WWD. “Zalando obviously has opportunities here in Europe but also has opportunities outside [Europe] — we are tapping into these opportunities with B2B software. But with our B2C business, though, we are focused on Europe.”
Europe’s fashion market is estimated to be worth around 500 billion euros and Zalando has only captured somewhere between 3 and 4 percent of that market, Schroeder continued.
In 2025, the company’s gross merchandise value, or GMV, rose 14.7 percent to 17.6 billion euros. GMV measures how much inventory the platform has moved and is usually higher than company revenue.
“So there’s lots of room for growth,” Schroeder said. “But we are also not ruling out we might possibly come to the U.S. one day.”
One of Zalando’s most significant assets is the data it has been collecting from customers for almost two decades now — but this is all from Europeans.
For example, Zalando has seen around a million consumers scan their physical measurements and send them to the company. Another 20,000 customers are doing so weekly, Zalando co-CEO Robert Gentz noted.
That information, combined with data from 7,000 brands and then analyzed by AI, has seen Zalando reduce returns — due to, for instance, somebody buying the wrong size — by 8 percent.
“Many companies out there state they have data,” Gentz argued. “But we are one of the very few that have unique data at scale.”
Although Gentz would not specify which or how many data points Zalando collected on each shopper, he confirmed that its advanced algorithms learn from millions of daily interactions.
The company uses what it calls a “shared data infrastructure engine supercharged by AI,” to inspire and engage consumers and to simultaneously enable e-commerce for brands and businesses who sign up to access Zalando’s software and logistics services.
“This engine gets better every day, every second, as more and more people use our apps, and more and more brands get deeply involved with our ecosystem,” Gentz enthused. “More scale means more data, and more data means our solutions just keep getting better.”
AI is also being used in other ways at Zalando, which employs around 3,000 technology specialists. It’s making writing new software faster as well as improving supply chains and timing on fulfillment.
In the future Zalando also plans to improve its AI-powered online fashion assistant so it can better “matchmake” for shoppers, suggesting items they might like to buy based on current or previous purchases.
“We developed our own foundation models specialized in matchmaking based on context and feedback with customers,” Gentz explained. “It’s impressive: 13 percent more items are being added to bags and wish lists as result.”
Additionally, 90 percent of Zalando’s marketing material is now AI-generated, and there’s 70 percent more of it because of AI. A year ago, that number was almost zero, Gentz pointed out.
“It [AI] allows us to move much quicker, so a process that used to take six weeks now takes days,” the executive said, noting that there was no longer as much need for cameras or photoshopping.
But a focus on industrial efficiencies at scale is also causing less celebrated changes at Zalando. Earlier this year the online giant said it would be closing its logistics center in Erfurt, eastern Germany, by September. Around 2,700 jobs may be lost. It is one of four logistics centers Zalando plans to close.
The headline-making Erfurt closure has been controversial and criticized by local politicians. But Zalando’s bosses would not be drawn further as to what kinds of impact the increased focus on AI was having on the company’s human resources.
Market observers have noted that the Erfurt location, one of Zalando’s first, was based on humans preparing products for delivery. In Zalando’s newer logistics centers that process is automated, run by AI and using robots.
“Zalando’s withdrawal from Erfurt by autumn 2026 marks … the beginning of a new, industrially driven phase of digital commerce in Europe,” Konrad Wolfenstein, a local consultant on the sector, wrote in January. “Zalando is increasingly transforming from a fashion retailer into a technology company with integrated logistics.”
In 2024, Zalando launched what it calls its “ecosystem strategy,” splitting 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.
The majority of the company’s revenues — 11.28 billion euros in 2025 — still comes from selling directly to consumers. However 32 percent of that came from partner businesses, where brands or stores sell through Zalando.
The platform wants to increase that to 40 percent by 2026, Gentz said. “We shifted from being a retailer to being a retail enabler.”
The purely B2B side of the business also grew, rising 14.6 percent to revenues of 1.09 billion euros, the first time the segment has crossed the billion-euro threshold.
As a result of the positive annual results, Zalando forecast that it expected further growth over this coming year, with revenue and GMV increasing somewhere between 12 and 17 percent. In 2026, Zalando also expects adjusted EBIT to come in between 660 and 740 million euros.
The company has had a strong start to the year and has not yet seen any impact due to the conflict in the Middle East, Dimitrova noted.
Zalando also said it was also on track to achieve midterm goals: By 2028, it expected between 13 and 18 percent growth in revenue and for its EBIT margin to rise to between 6 and 8 percent.