More Partners Join Zalando Platform as Consumers Turn to Online

• Upgraded guidance for FY2020: 20-25% GMV growth, 15-20% revenue growth, adjusted EBIT at 250-300 million euros
• Accelerated platform business: 180 new partners signed to partner program in Q2
• Adds new H&M Group brand: ARKET available on Zalando from August
• Q2 GMV growth expected at 32-34%, revenue growth at 26-28%
• Q2 Adjusted EBIT of 200 million euros to 220 million euros

BERLIN, JULY 15, 2020 // Zalando SE, Europe's leading online platform for fashion and lifestyle, has upgraded its full year guidance following an exceptionally strong performance in the second quarter of 2020. The company is confident to deliver strong and profitable growth for the full year and now expects to grow GMV by 20-25 percent and revenue by 15-20 percent in 2020. It further expects an adjusted EBIT of 250-300 million euros and investments between 230-280 million euros.

According to preliminary figures for the second quarter of 2020, Zalando has grown GMV by 32-34 percent to 2.67-2.71 billion euros (Q2 2019: 2.02 billion), and group revenues by 26-28 percent to 2.01-2.05 billion euros (Q2 2019: 1.60 billion). Zalando expects an adjusted EBIT in the range of 200-220 million euros (Q2 2019: 101.7 million), proving that the performance is back on track after a challenging trading environment in the first quarter. As per June 30, 2020, cash and cash equivalents stand at 1.38 billion euros.

The exceptional growth in the second quarter was enabled by the company's decisive crisis response and focused execution of the platform strategy on the one hand and the accelerated transition from offline to online on the other. Due to the ongoing impact of the coronavirus pandemic, customers are increasingly turning to digital services. As a result, Zalando has seen the number of new customers grow significantly over the past months. In the second quarter, more than three million new customers shopped at Zalando. Furthermore, Zalando's flash sales business, Zalando Lounge, saw record levels of traffic and revenue growth in the past quarter, as it met customer expectations particularly well due to its event and campaign-driven shopping experience.

Chief Financial Officer David Schröder says, "The high number of new customers shows that we offer a compelling customer experience in these challenging times. Due to prevailing health and safety concerns, customers generally like to shop online, and they particularly like to shop with us. As a result, we were able to successfully scale our platform business in the second quarter and to make significant progress in building the Starting Point for Fashion in Europe."

The strong financial results were also supported by two temporary effects. Strong growth of GMV and revenue was partly a result of pent-up demand from the first quarter shifting into the second quarter. This resurgent demand led to strong sell-through across spring/summer merchandise. At the same time, the company saw a decrease in the average return rate, which led to increased profitability. This was mainly driven by a shift in category mix, which saw a higher demand for Sports, Beauty and Kids items, and the strong increase in new customers.

Strong growth of the partner program

Additionally, Zalando saw its partner program grow strongly as brands and retailers increased their online activities and connected more stock to the Zalando platform, in order to reach their customers across Europe. Between April and June, around 180 new partners joined the partner program. Consequently, partner program GMV grew more than 100 percent year-over-year. Zalando will further invest into its platform business in the second half of 2020, as well as into expanding its relationships with brands in the wholesale business. In August, Swedish design brand ARKET will become available for all Zalando customers. ARKET joins Weekday and Monki as the latest H&M Group brand to bring its collections to the Zalando platform.

In order to bring online and offline retail closer together, Zalando has expanded its successful "Connected Retail" initiative to Spain, Sweden and Poland as of July. The program allows customers to shop from local brick-and-mortar retailers who make their stock accessible through the Zalando platform. Currently, more than 1,800 stores in five markets, including Germany and the Netherlands, sell directly to Zalando customers, who in turn benefit from greater choice and higher availability.

All figures reported herein are preliminary and unaudited. Zalando will publish the financial results for the second quarter of 2020 on August 11, 2020.

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ABOUT ZALANDO
Zalando () is Europe's leading online platform for fashion and lifestyle. Founded in Berlin in 2008, we bring head-to-toe fashion to almost 32 million active customers in 17 markets, offering clothing, footwear, accessories, and beauty. The assortment of international brands ranges from world famous names to local labels. Our platform is a one-stop fashion destination for inspiration, innovation, and interaction. As Europe's most fashionable tech company, we work hard to find digital solutions for every aspect of the fashion journey: for our customers, partners and every valuable player in the Zalando story. Our goal is to become the Starting Point for Fashion.

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