Zalando Targets Logistics As Mobile Fashion Sales Grow

Zalando Targets Logistics As Mobile Fashion Sales Grow

Europe's biggest dedicated online fashion retailer Zalando will invest more in logistics this year in its pursuit of market share and expects sales to rise by as much as a quarter. Zalando has forecast about 200 million euros (US$ 217 million) of capital expenditure in 2016, up from 70 million euro last year, mostly for building out existing distribution centres and speeding up planning for a fourth large warehouse. Launched in Berlin in 2008, Zalando serves customers in 15 European markets with more than 1,500 brands, with big names such as Gap, Banana Republic and Topshop added in the last year. Zalando is outpacing Britain's ASOS, which is encroaching on the German company's home turf by building a giant warehouse outside Berlin. ASOS reported European Union sales rose 29% in September to December. The firm expects sales in 2016 to rise at the upper end of the 20-25% rate it targets for the medium term, while it is aiming for a margin on adjusted earnings before interest and tax (EBIT) of 3-4.5%.

After Zalando exceeded the target in 2015 with a 33.6% growth rate, analysts forecast a rise of 25.4% for 2016 and an EBIT margin of 4.5%, according to Thomson Reuters SmartEstimates. Zalando is benefiting from a shift in online shopping to mobile devices from computers, which is encouraging customers to use apps which allow them to buy multiple fashion brands rather than visiting sites for individual labels. Zalando said 59.9% of site visits came from mobile in the last quarter of 2015, up from 47.9% a year ago.