Good
morning,
and
a
warm
welcome
to
Zalando's
Full
Year
publication
of
our
Results
2021.
My
name
is
Patrick
Kofler
and
I'm
heading
the IR
office
here
at
Zalando.
I
will
be
your
host
today.
Thank
you
for
joining
us
remotely.
It's
great
to
have
you
here,
even
if
only
virtually.
I
am
often
asked
why
we
have
a
co-CEO
structure.
Here's
one
of
the
reasons.
As
Robert,
our
co-CEO,
is
quarantined
after
being
exposed,
the
other
co-CEO,
David
can
step
in
easily.
Therefore,
we'll
kick
off
our
full
year
publication
with
our
co-CEOs
David
Schneider
and
COO
David
Schröder.
They
will
give
you
an
update
of
our
growth
ambitions
and
our
plan
for
next
year.
After
that,
we
have
a
dedicated
performance
deep
dive
on
our
recent
results
presented
by
our
COO,
David
Schröder.
For
the
Q&A
session,
we'll
be
back
here
live
together
with
both
Davids
on
stage
and
Robert
virtually
as
well.
A
couple
of
housekeeping
rules
before
we
actually
kick
this
off.
To
ensure
the
health
and
safety
of
our
team,
the
presentation
has
been
pre-recorded.
All
the
participants
on
site
have
tested
negative
to
the
coronavirus.
We
also
observe
the
necessary
hygiene
rules. If
you want
to ask a question, please click the
button, Ask
a Question on
the
right
side of
your screen. When you click on
it, you can easily
type in your
question.
The
question
section
is
open
in
the
next few
seconds.
And with this, David, the floor
is yours.
D
David Schneider
Co-Chief Executive Officer, Zalando SE
Welcome and thank you for
watching. Today, it is David and myself who will lead you through the 2021 results, but I can
speak
for
all
of
us
that
2021
was
an
outstanding
year
and
we
have
a
lot
of
exciting
initiatives
coming
up
and
we
will
talk
about
what
to
expect
in
2022.
So,
yes,
2021
was
a
truly
remarkable
year
and
an
important
step
on
our
journey
to
be
the
starting
point
for
fashion.
So
we
expanded
our
footprint
to
23
markets.
Last
year
alone
we
launched
six
new
markets
in
Eastern
Europe.
In
2021, we
reached
more
than
48
million
active
customers.
That
is
25%
increase
from
2020
and
that
also
means
we
expanded
our
customer
base
with
10 million
new
customers
which
is
great,
but
an
even
more
important
part
of
our
strategy
is
to
deepen
customer
relationship
and
create
loyalty
and
it
is also
something
we
really
see
paying
off.
To
give
you
an
example,
60%
of
our
overall
GMV
now
comes
from
active
customers
who
have spent
more
than
€500
a
year
with
us.
Our
customers
now
buy
on
average
five
times
a
year.
This
strong
tractions
in
customer
loyalty
has
translated
into
a
strong
financial
performance.
We
delivered
stellar
growth
momentum
and
an
acceleration
compared
to
2020.
Our
group
GMV
grew
to
€14.3
billion,
that's
got
quite
an
outstanding
34%
growth
year-on-year
and
maybe
let's
also
put
this
in
absolute
numbers.
We
added
€3.7
billion
in
GMV
in
one
year
and
as
we
have
also
strong
momentum
in our
Partner
Program,
revenues
didn't
grow
as
much
as
the
GMV.
But
I'm
also
proud
that
we
exceeded
€10 billion
in
net
revenues,
which
I
think
is
quite
an
amazing
milestones
and
like
the
13th
year
after
founding
Zalando.
Thanks
to
that
strong
momentum, we
were
able
to
deliver
a
healthy
level
of
profitability
with
more
than
€468
million
in
adjusted
EBIT
which
is
a
margin
of
4.5%
of
revenues.
Yeah.
That
was
a
great
result
and
there
was
a
lot
of
hard
work
behind
these
results.
So,
I
also
want
to take
the
opportunity
to
deeply
thank
all
our
employees
for
the
great
collaboration
for
the
focus
and for
all
the
commitment
everybody
put
in.
For
us,
being
the
starting
point
for
fashion
means
we
want
Zalando
to
be
the
destination
where
everyone
gravitates
to
for
all
their
fashion
needs
and
wants.
You
don't
need
to
go
anywhere
else
for
fashion,
because
we
have
it
all
in
fashion,
lifestyle and
beauty.
All
we
can
find,
it's in
for
you,
be
it
in
our
warehouse
network,
in
our
partners
e-com
warehouses
or
even
in
stores.
And
through
us,
you
can
get
it
in
the
most
convenient
way.
And
there's
no
way
to
get
it
faster,
easier
or
better.
And
on
top,
the
digital
experience
is
great.
It's
tailored
and
personalized
to
you.
So
if
you're
looking
for
something,
we
offer
the
easiest
place
to
find
it.
If
you
want
to
be
inspired
and
entertained,
Zalando is
the
best
place
for
that
too.
We're
not
there
yet
in
all
these
dimensions,
but
I
think
our
progress
is
amazing.
Yeah.
And
every
day
our
team
is
working
hard
to
live
up
to
these
promises
for
our
customers.
To
achieve
our
starting
point
ambition,
we
are
focused
on
three
strategic
pillars
and
have
set
ourselves
ambitious
goals
for
2025.
So
first,
we
aim
to
create
deep
customer
relationships
at
scale
to
play
an
important
part
in
our
customers'
lives.
Second,
we
transition
towards
a
true
platform
business,
or,
let's
rather
say
a
true
fashion
platform,
bringing
together
customers
and
partners
in
a
way
that
really
creates
unique
experiences
and
strong
benefits
for
all.
And
third,
we
use
our
scale
to
become
more
sustainable
and
drive
positive
impact
for
our people
and
the
planet.
And
this
is
not
only
the
right
thing
to
do,
but
also
strongly
in
line
with
long-term
interests
of
our
customers
and
partners.
The
strong
progress on
all
these
dimensions
last
year,
puts
us
in
a
very
good
position
to
reach
our
2025
goals,
which
are
over
€30 billion
GMV,
our
partner
business
share
of
more
than
50%
and
to
grow
in
a
more
sustainable
way,
working
towards
our
net
positive
target.
Let
me
maybe begin
with
our
first
strategic
dimensions
to
create
deep
customer
relationships
at
scale.
In
our
journey,
we
learn
that
just
selling
different
categories
to
our
customers
is
not
ideal.
Customers'
needs
and
wants
are
so
different
that
ultimately
we
cannot
just
add
new
categories
of
merchandise.
Instead,
we
build
distinct
customer
propositions.
If
you're
interested
in the
latest
beauty
trends
or
if
you
prepare
for
an
outdoor
adventure,
you
want
to have
an
experience
that
really
caters
to
your
needs
in
that
moment.
And
to
us,
a
proposition
means
a
tailored
experience
and
a
commitment.
So
only
when
you
commit
to
deeply
understanding
the
needs
and
wants
of
customers,
be
it
in
fashion
or
in
beauty
or
in
sports
or
in
pre-owned,
then
you
can
drive
innovation
in
the
experience
and
earn
deep
customer
relationships.
Our
core
proposition
is
fashion.
That's
where
we
started
and
that's
the
biggest
propositions
we
are
known
for
and
loved
for
by
our
customers.
About
90%
of
our
active
customers
buy
fashion
with
us.
And
if
you look
at
the
past
few
years,
there's
been
a
huge
development. We
have
an
ever-growing
selection
and
access
to
the
most
relevant
plans
and
stories.
We
drive
innovation
and
understanding
customer
styles
and
sizes
to
really
make
the
right
recommendations.
We
add
inspiration
and
entertainment,
which
I
think
becomes
more
relevant
in
future
and
one
of
the
highest
priorities we
have
to
work
on,
because
really
no
single
platform
has
figured
out
how
to
combine
a
transactional
e-com
experience
with
the
content-driven
inspirational
experience.
There's
either
the
content
experiences
that
are
not
great
in
enabling
a
customer
to
buy
something
or
there
is
an
e-com
experience,
where
customers
are
not
really
inspired
or
entertained.
And
that's
probably
the
biggest
frontier
in
fashion
commerce.
And
we're
very
committed
to
make
bigger
steps
in
this
journey
throughout
the
year.
Let's
take
a
look.
[Video Presentation]
(00:08:54-00:10:49)
But
let's
also
have
a
look
at
our
other propositions.
Last
year,
we
talked
a
lot
about
beauty
and
how
we
want
to
win
in
the
beauty
space.
That
it
requires
a
proposition and
in-depth
innovation
of
the
experience. Yeah,
we've
made
great
progress here.
Beauty
grow
over a 100%
year-on-year.
We
increased
our
selection
to
over
25,000 products
from 400
brands,
added
great
beauty
houses
like Estée Lauder,
L'Oréal
or
Coty,
and
of
course,
also
through
our partnership
with Sephora.
We're
on
a
strong
path
with beauty
and
are
happy
with
how
customer
or
customer
base
has
adopted
our
beauty
proposition. But
for
us,
it's
not
only about
beauty
itself, we have
developed
a repeatable
playbook, a
playbook
of
how
we
can
broaden
our
customer
proposition
offerings.
Then
dive
deep in
the
innovation
of
the
experience
and
help our
customers
to
cross
connect
across
all
these
propositions.
In
this playbook,
we
can
use
to
build
our
further
propositions, yeah,
and
open
more
doors
for
customers
to
connect. And
talk
about
connecting,
connecting
this
proposition
is
a
critical
part
of
our
strategy
to
achieve
deeper relationships.
Well,
we
want
to
dive
deep
in
the
innovation
of
each
propositions.
Ultimately,
we
want
to
make
sure
that one
plus one
is
more
than
two.
There's
a
lot
of
value for
customers
to
engage
in
all
our
propositions
in
order
to
get
the
most
out
of Zalando. And
Zalando
Plus,
our
membership
program is
our
ultimate
tool
as
a
[ph]
meta (00:12:32)
proposition
that
unlocks
value.
Plus,
for
an
annual
fee, you
get
the
best out
of
Zalando,
even faster
shipments and
early
access
to
exclusive product
lines.
And
we
just
passed the
mark
of
more than
1
million members,
that's
an amazing
milestones three
years after
we
launched
Plus.
And
there
is
now
more
to
come
with
Plus.
While
the
first million
members
took
us three
years,
the
second million
we forecast
to
achieve in
this year.
In
2022,
we
will
double down
in
making
Zalando
Plus
the loyalty
program
in
fashion.
After
expanding
the
program
to
the
Netherlands, France
and
Italy
in
2021,
we
will
double the
number
of
new
markets
by
the
end
of 2023.
We'll
add
more
benefits
and
improve
existing
ones
in
the
area
of
convenience
and
assortment.
For
example,
we
will
give
Zalando Plus
members early
access
to sales
events.
So,
Plus
is
the
ultimate
sign
of
deep
relationships
for
our
customers.
Yeah. A plus
member
visits
Zalando twice as
often
and
spends
three
times
more
than
a
non-Plus
customer.
We
just
talked
a
lot
about
how
we
aim
to
create
these great
experiences, be
it
for
fashion
or
for
beauty
or
for
designer,
customers
want
more
choice. They
seek
inspiration. And
they want
to
be
entertained. And
our
partner brands
deliver
a
great deal
of
this. They
add
to
a
limitless
choice
to
a
strong
brand
stories
and
even, all
the
hot
drops
people
used to
line-up
for
in
the
streets. Building
our
customer experiences
also
means
building
a destination
where
brands
want
to be.
Only
if
our partners
see
a
big
value
add
of Zalando
for
their own
strategy,
they
will invest
with all
these
assets.
There
are
two
main
components
that
create
strong
value
for
partners.
Number
one
is
a
multi-brand
environment
for
millions of
customers.
And
number
two
capabilities for
e-commerce
at
scale. We'll
explain how
we
invest
into
these
areas in
a
way that
no
individual brand
could.
And
how this
actually creates
strong win
win
win
situation for
customers, partners
and
Zalando.
So,
let's
start with
the
multi-brand
environment.
So why
do
we
mention
multi-brand
so
often,
because
that
is
how
customers
shop fashion.
Zalando customers
shop
on
average
18
different
brands
throughout
their
order
history.
And even
within
one
order,
50%
shop
more
than
one
brand.
As
a
fashion
inspiration
starts
in
the
vast majority
of
all
customers journeys
without
a concrete
product
or
brand
in
mind,
and
being
the
starting
point
means
that
customers
come
to
us
before
they decide
what
they
buy.
And
this concept
is very
important
for
our partners,
because
they
know they
can
only
cover
like
a
smaller
fraction
of
the
inspiration
part
themselves and
they
need to
be
where the
customers
really engage.
So,
we
will
build
the
place
where
they
can engage
with
the
relevant
audience.
And I
think
our
growing brand
portfolio
is
a
good
indicator of
how
relevant
we
are
for
brands, launching
brands
like
Sephora
or
Apple
watches
show
how
we
create
stories
that
elevate
brand equity
and customer
engagement.
We
have
scaled
our
assortment
with
driving
really
like
a
flawless
choice across
5,800
brands,
meaning
we were
able
to
increase
the
assortment
of
our
most
relevant
brands
by
over
75%.
And
it's
not
only
about
a
wide
assortment,
it's
also
about
showcasing
the
brand's
DNA
and
presenting
the
best
range
of
products.
And
that's
why
we
have
introduced
Dedicated
Brand
Homes.
These
allow
our
customers
to
follow
the
brands
they
love.
In
turn,
brands
can
engage
with
customers
in
a
meaningful
way
and
build
deeper
relationships
and
deep
learnings
for
themselves.
Already,
14
million
Zalando
customers
have
become
brand
fans
over
the
past
years.
And
last
but
not least
our
shared
values
across
topics
like
inclusivity
or
talking about
genderless
or
sustainability
unlock
impactful
collaborations. As
all
of
these
topics
are
very
much
top
of
mind
for
our
customers
and
together
with
our
partners
we
aim
to
drive
further
engagement
across
these
trends.
Investments
and
innovation
in
these
areas
in
a
multi-brand
environment
creates
a
strong
value
add
for
brands
as
it
helps
them
to
connect
to
their
target
audience,
and
it
helps
them
in
their
own
strategy.
The
more
brands
invest
into
the
Zalando
experience,
the
better
our
customer
propositions
get.
The
second
big
value
add
for
our
partners
our
capabilities
that
enable
digital
business.
So
we
solve
three
major
challenges
for
them.
First,
they
have
to
be
online
where the
customer
is,
and
we
able
them
to
go
direct-to-consumer
in
the
multi-brand
environment.
Our
Partner
Program
and
Connected
Retail
are
our
way
to
put
them
out
there.
And
you
also
see
that
the
strong
brands
place
more
and more
bets
on
direct-to-consumer.
And
I
think
it's
a
very
strong
signal
that
they
consider
not
only
like
their
own
website
as
direct-to-consumer,
but
also
selling
through
our
platform.
And
by
now,
30%
of
our
GMV
comes
from
this
model.
As
a
second
step,
partners
can
leverage
our
infrastructure
to
reach
customers
in
all
of
our
markets.
Zalando
Fulfillment
Solutions
is
a
great
lever
for
brands
to
boost
their
reach
without
having
to
invest
in
their
own
infrastructure.
We
strive
for
75%
of
Partner
Program
items
shipped
by ZFS
by
2025. And
today,
we're
already
at
55%,
so
we're
on
a
very
good
track.
And
then,
thirdly,
we
enable
partners
to
speak
to
their
audience
and
leverage
our
data
and
reach
to
drive
their
sales;
and
not only
sales
but
also
to
position
their
brand.
Our
long-term
target
is
that
3%
to
4%
of
our
GMV
comes
from
the
Zalando
Marketing
Services.
And we
reached
2%
in
the
fourth
quarter
of
2021,
which
I
think
is already
like
a
good
proof
point
that
more
and
more
partners
are
adopting
our
marketing
services.
Let's
dive
one
level
deeper
into
our
logistics
capabilities,
as
these
are
clearly
needed
for
any
direct-to-consumer
approach.
And
we
have
built
a
highly
relevant
network.
So
our
Partner
Program
business
is
a
strong
indicator
of
how
brands
engage
with
a
direct-to-consumer
possibilities.
Our
partner
business
grew
at
an
impressive
rate
of
over
75%.
That's
more
than 3
times
faster
than
our
retail
business.
Then
Zalando
Fulfillment
Solutions at
the
same
time
grew
even
stronger.
The
item
volume
sold
by
partners
but
shipped
by
Zalando
more
than
doubled
year-over-year.
And
one
of
the
reasons
for
partners
to
utilize
ZFS
is
the
immediate
international
footprint.
We
offer
all
of
euros
in
a
box
to
partners,
which
most
cannot
cover
with
their
own
footprint
or
with
like
a
logistics
provider.
This
is
reflected
in
the
strong
growth
rate
of
our
Partner
Programs
in
markets
other
than
Germany.
For
example,
in
Switzerland
we
went
up
10 percentage
points
yet
to
partner
business
share
of
25%.
In
Belgium,
we
reached
33%
or
in
Spain,
we
more
than
doubled
its
share
to
19%.
And
I
think
Spain
is
also
a
good
example
of
how
Connected
Retail
adds
a
lot
of
value
to
local
customers.
Connected
Retail
means
connecting
inventory
of
local
brick
and
mortar
stores
and
shipping
it
directly
from
the
stores
to
customers.
We
have
now
more
than
7,000
stores
connected
in
our
network.
If
we're
successful
enabling
partner
business
success
on
Zalando,
yeah, and
on
the
Zalando
platform,
we
can
also
enable
our partners
to
leverage
our
logistic
backbone
to
drive
the
success
of
their
direct-to-consumer
business
across
all
channels.
So,
we
will
start
by
opening
up
Zalando
Fulfillment
Solutions
with
channels
beyond
Zalando.
And
therefore,
we
enable
multichannel
fulfillment
for
our
partners.
And
by
doing
this
we
will
offer
brands
and
retailers
the
opportunity
to
outsource
e-commerce
logistics
to
Zalando.
Some
of
our
partners
have
actively
asked
for
assets
to
fulfill
beyond
our
platform
because
they
face
challenges
in
their
own
approach.
For
example,
if
they
serve
Zalando
customers
and
then
at
the
same
time
their
own
e-com
and
several
other
channels
that
usually
leads
to
splitting
up
inventories
and
that
again
leads
to
bad
order
economics.
I
can
tell
you
partners
don't
like
fragmented
inventory.
And
another
reason
shipping
cross
border
and
integrating
like
the
right
providers
is quite
complex,
and
usually
many
brands
and
providers
cannot
ship
to
like
all
the
markets
we're
talking
about.
Then,
at
the
same
time,
customers'
expectations
around
convenience
are getting
higher
and
higher.
And
then
also
investment,
what's
becoming
more
sustainable
and
then
your
own
operations
are
needed
and
in
demand
by
customers.
We
have
built
a
large
and
flexible
networks
that
will
tackle
all
of
these
challenges.
We
can
offer
partners
flexible
expansion
to
reach
all
markets
and
tap
into
our
constantly
improving
convenience
offer.
And
then
also
we're
consolidating
orders –
we
improve
order
economics
and we
also
reduce
the
carbon
footprint,
which
is
a
nice
segue
to
the
third
element
of
our
strategy. And
we
aim
to
build
a
sustainable
platform
to
win
the
hearts
and
minds
of
our
customers.
Our
ambition
is
to
be
a
net
positive
company
in
the
long
run,
and
that
means
that
we
give
back
more
to
society
and
the
environment
than
we
take.
And
that's
a
high
ambition.
To
achieve it,
we
have
to
work
on
solutions
together
with
our
partners
and
invest
in
innovative
technologies.
Only
then
we
can
really
unlock
opportunities
that
will
help
both
Zalando
and
the
industry
to
evolve. And
we
believe
that
with
our
platform,
we
are
in
the
right
position
to
do
so
because
we can
engage
with
more
than
5,800
brands
and
on
the
other
hand,
48
million
customers.
And
we
drive
our
efforts
forward
in
three
areas:
our
planet,
products,
and
people.
And
we're
very
confident
in
our
efforts
and
believe
we're
on
the
right
path.
Nevertheless,
there
are
significant
challenges
to
solve
and
solutions
to
scale.
Let's
dive
into
two
examples.
So
my
first
example
is
our
more
sustainable
assortment.
Our
commitment
is
to
generate
25%
of
our
GMV
with
more
sustainable
products
by
2023.
And
I
think
we've
made
quite
some
good
progress
so
far.
We're
proud
to
offer
our
customers
what
we
believe
is
the
biggest
sustainable
assortment
in
Europe
with
now
more
than
140,000
products,
and
that
compares
to
around
80,000 last
year.
Maybe
also
to
put
it
a
bit
in
perspective,
our
sustainability
assortment
is
now
as
large
as
our
entire
assortment
in
our
IPO
year.
And
the
sale
of
these
products
accounted
for
21.6%
of
our
gross
merchandise
volume
overall
which
is
already
getting
close
to
our
25%
target.
And
also
from
customers we
get
very
good
feedback.
We
see
strong
interest
in
these
products.
For
example,
if
we
look
at
conversion
rates
or
on
more
sustainable
products
versus
similar
standard
products.
And
in order
for
this
progress
to
be
meaningful,
we
need
to
overcome
three
key
challenges.
The
first
is
the
lack
of
a
common
definition
for
sustainability
for
fashion
products.
And
the
second
challenge
is
tracing
all
this
information
across
the
value
chain,
starting
from
the
field
to
the
product.
Then,
the
third
challenge
is
around
customers
understanding
of
these
standards.
We
know
from
our
research
that
they
find
sustainability
to
be
quite
complex.
It's
complex
to
understand.
It
is
also
complex
to
act
on
it.
And
that's
why
we
have
a
team
fully
dedicated
on
building
a
better
digital
experience
that
allows
customers
to
engage
with
sustainability
in
a
better
way.
My
second
example
is
more
sustainable
packaging.
When
it
comes
to
packaging,
of
course,
our
first
priority
is
to
ensure
the
products
reach
our
customers
safely
and
undamaged.
But
at
the
same
time,
we
aim
to
reduce
our
packaging
volumes
to
a
minimum
and
specifically
eliminate
single-use
plastic.
To
do
this,
we
focus
on
two
key
elements
in
our
packaging
design.
And
number one,
89%
of
our
packaging
materials
contains
recycled
input.
And
then,
99%
is
recyclable
so
that
our
customers
can
dispose
of
the
packaging
responsibly.
Our
main
achievement
last
year
was
to
switch
to
paper
shipping
bags
across
Zalando,
which
we'll
actually
complete
in
the
next
few
months.
But
one
long-term
challenge
in
the
industry
remains,
polybags.
This is
a
massive
challenge,
and
industry
is –
basically
every
single
product
is
wrapped
in a
polybag.
So
what
we'll
do
is,
together
with
our
partners,
we're
testing
new
materials
and
reusable
options
to
tackle
this.
But
we
have
also have
to
be
honest
that
there
is
a
long
way
to
go.
So
this
would
be
one
of
our
key
focus
areas
going
forward.
That
was
just
a
snapshot
of
all
our
efforts
we're
driving.
I
have
to
say
that
it's
very
motivating
to
see
how
passionate
all
teams
are
working
on
ideas
and
how
to
–
how
deeply
ingrained
sustainability
already
is
in
all
of
our
projects.
And
we
have
talked
a
lot
about
growth,
but
it's
important
for
us
to
not
grow
just
for
the
sake
of
growing.
And
we want to
leverage
all
of
our
customer
reach,
our
capabilities
and
our
relationships
in
the
industry
to
enable
and
then
drive
some
structural
changes.
With
that,
I
would
like
to
hand
over
to
David,
who
can
give
you
an
overview
of
how
the
sustainable
growth
looks
like
in
numbers.
D
David Schröder
Chief Financial Officer, Zalando SE
Over
the
past
24
months,
we've
experienced
an
exceptional
operational
and
financial
performance
acceleration.
As
a
result
of
this
acceleration,
which
was
particularly
pronounced
in
the
first
half
of
2021
with
GMV
growth
reaching
46%
year-over-year,
we
are
well
on
track
to
reach
our
mid-term
growth
ambition.
As
European
consumers
and
economies
are
gradually
returning
back
to
a
new
normal,
we've
seen
our
growth
rates
starting
to
normalize
since
summer
2021.
That
said,
we
are
confidently
looking
ahead
towards
our
2025
GMV
target
of
more
than
€30 billion,
as
we
continue
to
grow
from
a
significantly
higher
base.
The
opportunity
ahead
of
us
remains
immense.
We
are operating
in
a
large
market
that
is
projected
to
grow
to
€450 billion
over
the
next
few
years.
And
although
we
have
achieved
a
lot
over
the
past
decade
Zalando's
market,
share
is
still
only
at
around
3%.
The
COVID-19
pandemic
has
accelerated
change
in
the
fashion
industry
that
has
long
been
in
progress
and
has
blurred
the
boundaries
between
offline
and
online
as
consumers
and
brands
are
increasingly
going
digital.
And
our
strong
platform
strategy
perfectly
positions
us
to
take
advantage
of
this
opportunity
making
us
confident
that
we
can
serve
more
than
10%
of
the
total
fashion
market
in
the
long
term.
To
capture
this
opportunity,
our
number
one
priority
remains
to
deliver
continued
strong
growth.
Hence,
we
continue
to
invest
through
the
cycle
to
create
long-term
value
for
customers,
partners
and
shareholders.
For
2022,
we
do
expect
a
more
volatile
market
environment
driven
by
three
key
factors,
weakening
consumer
sentiment,
continued
supply
chain
disruptions,
and
rising
inflation
concerns.
While
we
will
not
be
able
to
fully
isolate
ourselves
from
these
temporary
market
developments,
we
are
confident
that
just
like
in
the
past
our
strong
platform
business
model,
our
agile
business
steering
approach,
and
our
continued
efficiency
improvements
will
allow
us
to
successfully
navigate
through
this
volatile
market
environment
and
to
continue
to
grow
faster
than
the
European
online
fashion
segment.
Looking
ahead
at
2022,
we
does
expect
to
grow
GMV
by
16%
to
23%
and
to
add
€2
billion to
€3
billion
additional
GMV.
On
a
two-year
CAGR
for
the
years
2021
and
2022,
our
GMV
outlook
implies
a
growth
range
of
25%
to
28%,
ahead
of
our
mid-term
target
growth
corridor
of
20%
to
25%.
In
line
with
our
platform
transition
and
increasing
share
of
the
Partner
Program,
we
expect
revenue
growth
to
trail
GMV
growth,
resulting
in
revenue
growth
of
12%
to
19%.
Similar
to
last
year
this
growth
will
not
be
evenly
distributed
across
quarters.
Due
to
baseline
effects
we
expect
lower-than-usual
year-over-year
growth
for
the
first
half
and
a
re-acceleration
in
the
second
half.
Looking
at
profitability,
we
expect
an
adjusted
EBIT
of
€430
million
to
€510
million,
implying
a
margin
of
3.7%
to
4.1%,
which
is
well
in
line
with
our
mid-term
guidance.
To
fund
our
continued
investments
into
our
logistics
infrastructure
and
our
technology
platform
and
thereby
enable
our
2025
growth
ambition,
we
plan
capital
expenditure
of
€400 million
to
€500
million.
And
now
back
to
you,
David,
for
some
final
remarks.
D
David Schneider
Co-Chief Executive Officer, Zalando SE
Yeah.
We
have
a
very
strong
team
in
place
to
advance
our
strategic
agenda
to
scale
the
business
and
of
course,
to
continue
to
deliver
results.
Robert
and
I
are
very
happy
that
Sandra
has
joined
our
management
board
today
as
CFO,
and
David
will
assume
a
newly
created
role
as
Chief
Operating
Officer,
focusing
on
building
and
scaling
unique
capabilities
and
enabling
the
company's
growth.
Jim
transitioned
last
year
from
CTO
into
newly
Credit
Chief
Business
and
Product
Officer
role,
yeah,
developing,
marketing
and
growing
our
consumer
offerings.
And
Astrid
joined
us
last
April
as
Chief
People
Officer.
We
are
all
excited
about
the
strong
progress
we
have
made
in
2021
and
further
strengthening
our
position
as
the
starting
point
for
fashion.
In
2021
the
company
grew
significantly
faster
than
expected
and
putting
us
on
track
to
achieve
our
mid-term
growth
ambition
and
reach
more
than
€30
billion GMV
by
2025.
And
Zalando continues
to
focus
on
strategic
initiatives
that
will
drive
future
growth.
We're
laser-focused
on
execution
and
in
a
strong
position
to
continue
to
deliver
long-term
growth.
Yeah,
thanks
to
the
whole
team
for
this
outstanding
achievement.
And
yeah,
now
let's
hear
what
David
has
to
say
and
jump
to
our
performance
deep
dive.
D
David Schröder
Chief Financial Officer, Zalando SE
Welcome
to
our
performance
deep
dive
session.
Today's
keynote
highlighted
a
strong
progress
we
are
making
towards
our
vision
to
be
the
starting
point
for
fashion.
Providing
further
insights
into
our
key
strategic
priorities
and
initiatives
for
2022
and
reiterating
our
2025
ambition.
Building
on
that,
I
will
now
provide
you
with
more
details
regarding
the
development
of
key
strategic,
operational
and
financial
performance
indicators
for
Q4
and
full
year
2021;
as
well
as
additional
information
regarding
our
outlook
for
2022.
Starting
with
our
strategic
priorities
to
grow
our
active
customer
base
and
to
further
deepen
our
customer
relationships,
we
see
great
progress
when
looking
at
key
metrics.
During
2021,
we
were
able
to
grow
our
active
customer
base
to
48.5
million
customers,
supported
by
strong
new
customer
acquisition
throughout
the
year.
We
also
saw
a
continued
decrease
in
new
customer
churn,
with
churn
reaching
an
all-time
low
over
the
course
of
2021.
Customer
order
frequency
reached
a
new
all-time
high
of
5.2
orders
per
active
customer
over
the
past
12
months.
Average
basket
size
showed
a
slight
year-over-year
decrease
of
1.3%,
mainly
driven
by
a
lower
average
item
value
compared
to
the
prior
year.
As
a
result
of
increasing
order
frequency
and
broadly
stable
basket
size,
GMV
per
active
customer
grew
by
more
than
7.1%
over
the
last
12
months
to
now
almost
€300,
representing
the
strongest
year-on-year
increase
since
2017.
While
we
are
very
happy
with
the
progress
achieved
in
2021,
we
expect
our
customer
metrics
to
normalize
over
the
coming
quarters
as
the
return
to
normal
continues.
When
looking
at
customer
development
over
a
longer
time
horizon,
we
see
consistently
positive
trends
and
the
evolution
of
our
customer
cohorts.
These
trends
are
well
reflected
in
this
cohort
chart,
which
we
update
and
share
with
you
on
an
annual
basis.
It
shows
the
total
GMV
per
cohort
and
order
year.
The
light
gray
bar
at
the
bottom
shows
the
GMV
from
cohorts
we
had
acquired
before
2016.
Staggered
on
top
of
that,
you
see
the
GMV
contribution
of
cohorts
we
acquired
in
the
years
thereafter.
During
2021,
we
saw
more
than
10 million
new
customers
join
our
platform
to
shop
fashion,
beauty
and
lifestyle
products.
The
2021
cohort
delivered
almost
25%
more
GMV
in
the
first
year
than
the
cohort
acquired
in
2020.
But
it
is
not
only
the
newly
acquired
customers
that
contribute
to
Zalando's
growth.
When
we
look
at
the
development
of
older
cohorts,
we
see
consistent
growth
and
an
increase
of
annual
GMV
contribution
for
each
cohort
from
the
second
year
onwards
following
some
initial
churn
in
the
first
year.
It
might
be
interesting
to
note
that
in
2021,
Zalando's
GMV
would
have
grown
at
a
double-digit
rate,
even
if
we
had
not
acquired
a
single
new
customer.
Let
me
now
provide
a
bit
more
context
regarding
the
exceptionally
large
customer
cohorts
acquired
during
2020
and
2021.
This
period
has
been
strongly
influenced
by
the
evolution
of
the
global
pandemic
and
resulting
governmental
restrictions
and
changes
in
customer
behavior,
causing
an
acceleration
in
the
structural
consumer
demand
shift
from
offline
to
online.
As
a
consequence,
more
consumers
than
ever
before
have
shifted
to
Zalando
for
their
fashion
and
lifestyle
needs.
Our
new
customer
growth
accelerated
significantly
from
2019
to
2020
and
remained
at
an
elevated
level
in
2021.
When
looking
at
the
quality
of
these
customer
cohorts
in
more
detail,
we
see
that
they
show
very
similar
or
even
slightly
better
characteristics
compared
to
previously
acquired
cohorts,
as
indicated
by
their
engagement,
their
reorder
behavior
and
their
spend
with
us.
This
observation
also
holds
true
beyond
the
peak
periods
of
the
pandemic,
as
proven
by
the
continued
strong
developments
in
the
second
half
of
2021,
when
European
consumers
and
economies
saw
a
gradual
return
to
normal.
Let's
now
turn
to
our
second
strategic
priority,
enabling
our
partners'
direct-to-consumer
business,
which
is
at
the
core
of
our
platform
transition.
In
2021,
we
recorded
exceptional
growth
across
our
entire
portfolio
of
partner-facing
platform
services.
Our
partner
business,
consisting
of
the
Partner
Program
and
Connected
Retail,
which
aims
to
connect
our
partners
directly
with
European
consumers,
has
grown
by
more
than
75%
in
2021,
resulting
in
a
partner GMV
share
of
30%
in
Q4.
Zalando
Fulfillment
Solutions
which
allow
our
partners
to
leverage
our
European
logistics
network
to
increase
their
customer
reach
and
satisfaction,
while
at
the
same
time
reducing
complexity
and
cost,
have
grown
even
faster
than
our
core
offering
over
the
course
of
the
last
year.
The
number
of
items
shipped
via
ZFS
increased
by
more
than
100%
year-over-year,
representing
a
55%
share
of
all
Partner
Program
items
shipped
in
Q4.
Last
but
not
least,
Zalando
Marketing
Services,
which
enable
our
partners
to
increase
their
visibility
of
the
offering
and
to
build
their
brand
on
Zalando,
also
recorded
very
strong
growth
of
more
than
90%
in
2021. ZMS
revenues
reached
2%
of
Fashion
Store
GMV
in
Q4,
putting
us
well
on
track
to
achieve
our
long-term
ambition
of
3%
to
4%
of
GMV.
Our
third
strategic
dimension
is
focused
on
people
and
planet,
and
on
delivering
the
ambitious
goals
we
set
out
in
our
do.MORE
sustainability,
as
well
as
our
do.BETTER
diversity
and
inclusion
strategies.
As
a part
of
our
Zalando
principle
[indiscernible]
(00:39:04)
transparency,
we
report
annually
on
the
progress
made
in
both
areas.
While
you
will
find
a
great
level
of
detail
in
the
relevant
sustainability
and
D&I
progress
reports
available
on
our
website,
I
would
hereby
like
to
highlight
that
we
made
continuous
and
strong
progress
towards
reaching
our
sustainability
goals,
which
is
also
being
recognized
externally.
As
a
part of
our
do.MORE strategy
and next
to drastically
reducing our
own emissions,
we
aim
for
our partners
accounting
for
90%
of
supply
related
emissions
to
set
science-based
emission
reduction
targets
by
2025.
By
the
end
of
2021,
we
are
pleased
to
say
that
partners
accounting
for
around
51%
of
supply-related
emissions
had
[audio gap]
(00:39:48) compared
to
34%
in
2020.
The
second
example
shown
here
concerns
our
sustainable
packaging
targets.
With
our
switch
from
plastic
to
paper
shipping
bags,
we
reduced
the
use
of
plastic
shipping
bags
to
37%
at
the
end
of
2021
and
aim
for
0%
by
2023.
Thirdly,
we
expanded
our
portfolio
of
more
sustainable
products
to
more
than
140,000
products,
compared
with
around
80,000
a
year
earlier.
The
sale
of
these
products
accounted
for
almost
22%
of
our
GMV.
These
are
just
three
examples,
but
they
clearly
demonstrate
that
we
are
making
quantifiable
progress
and
leveraging
our
position
to
drive
positive
change
in
the
industry.
This
concludes
our
wrap
up
on
the
strategic
progress
we
made
over
the
course
of
the
year.
Let's
now
turn
to
our
financials,
starting
with
top-line
performance.
We
are
pleased
to
report
that
2021
saw
exceptional
top-line
performance
with
GMV
growth
of
34.1%
and
revenue
growth
of
29.7%,
with
full
year
revenues
surpassing
the
€10 billion
mark.
Both
GMV
growth
and
revenue
growth
are
in
the
upper
half
of
our
financial
guidance
for
2021.
For
the
fourth
quarter,
GMV
growth
reached
24.1%
year-over-year,
with
revenue
growing
20.5%
year-over-year,
well
in
line
with
our
mid-term
target
growth
corridor
of
20%
to
25%
and
representing
a
two-year
CAGR
of
more
than
30%.
Looking
at
both
full-year
2021
and
Q4
developments,
partner
GMV
growth
again
exceeded
overall
GMV
growth
significantly.
This
also
explains,
to
a
large
degree,
the
gap
between
GMV
and
revenue
growth.
Let's
now
take
a
brief
look
at
the
developments
of
each
of
our
three
segments.
In
2021
Fashion
Store
GMV
grew
by
32.6%.
Within
Fashion
Store,
the
growth
rates
for
the
DACH-region
and
the
Rest
of
Europe
region
were
on
a
similar
high
level
in
2021,
driven
by
a
significant
growth
acceleration
in
the
DACH-region
by
8
percentage
points
to
33.3%
GMV
growth,
whereas
Rest
of
Europe
GMV
growth
remained
strong
and
fairly
stable
at
31.9%.
Our
Offprice
segment
continued
on
its
strong
growth
trajectory,
recording
around
50%
GMV
growth
for
Q4,
as
well
as
full-year
2021,
which
is
remarkable,
particularly
in
light
of
an
increasingly
challenging
supply
situation.
The
other
business
segment
followed
the
positive
trend,
driven
by
a
strong
performance
from
Zalando
Marketing
Services,
which
benefited
from
continued
high
demand
of
our
brand
partners
for
our
advertising
products,
resulting
in
revenue
growth
of
around
95%
for
2021.
In
the
fourth
quarter
alone,
ZMS
grew
53%
year-over-year.
Besides
using
ZMS
to
drive
sales
on
the
platform
by
increasing
visibility
for
certain
products,
our
partners
also
increased
their investments
in
branding
campaigns
to
build
their
brand
equity
on
Zalando.
Let
me
conclude
the
discussion
of
top-line
growth
by
looking
at
our
multi-year
growth
performance
since
the
beginning
of
the
pandemic.
It
is
very
notable
that
our
two-year
GMV
CAGR
exceeded
our
mid-term
GMV
growth
ambition
of
20%
to
25%
CAGR
in
every
single
quarter
since
Q2
2020
and
exceeded
30%
for
three
consecutive
quarters
from
Q4
2020
to
Q2
2021,
before
starting
to
normalize
again,
which
we
expect
to
continue
in
2022.
Let's
now
turn
to
profitability.
We
recorded
an
adjusted
EBIT
of
€468
million
in
2021,
representing
a
4.5%
margin
on
the
back
of
strong
top-line
momentum
and
a
continued,
yet
temporary
return
rate
benefit.
Q4
profitability
came
in
slightly
above
pre-pandemic
levels,
yet
remained
below
last
year's
level.
When
looking
at
the
regional
profit
distribution
in
our
core
Fashion
Store
segment,
we
can
see
that
our
more
mature
markets
in
the
DACH-region
delivered
strong,
absolute
as
well
as
relative
profitability
for
the
full-year
2021,
also
supported
by
a
higher
partner
business
share.
The
fully
adjusted
EBIT
margin
of
8.7%
for
DACH
Fashion
Store
is
in
line
with
2020.
Rest
of
Europe
profitability
came
in
slightly
negative
and
decreased
year-over-year,
driven
by
continued
and
deliberate
over
proportional
investments
into
customer
acquisition
and
customer
experience
to
drive
growth
and
market
share
gains
in
Rest
of
Europe,
particularly
also
in
the
six
new
markets
in
Central
and
Eastern
Europe,
which
we
launched
and
ramp
up
over
the
course
of
2021.
Offprice
saw
a
more
normalized
adjusted
EBIT
margin
of
7.2%
for
the
full
year,
compared
to
9%
in
2020.
However,
the
segment
delivered
a
strong
Q4
performance,
increasing
the
adjusted
EBIT
margin
slightly
to
13.1%.
Our
other
business
turned
breakeven
for
the
first
time
over
an
entire
business
year.
Let
me
now
give
you
more
detail
on
our
cost
line
developments
that
drove
profitability
in
2021.
For
2021
overall,
gross
margin
decreased
by
0.7
percentage
points
compared
to
last
year's
level,
mainly
as
a
result
of
increased
discounts
to
offer
our
customers'
competitive
prices
in
a
highly
promotional
market
environment,
particularly
in
the
second
half
of
the
year,
as
well
as
continued
business
mix
changes
in
terms
of
category
mix
and
country
mix.
Our
fulfillment
cost
ratio
improved
for
the
full
year
compared
to
2020,
as
a
result
of
a
higher
level
of
utilization
and
efficiency
across
our
European
logistics
network,
and
improved
order
economics
benefiting
from
a
lower
return
rate.
The
year-over-year
deterioration
in
the
fourth
quarter
fulfillment
cost
ratio
is
due
to
deliberate
investments
into
our
convenience
proposition
to
further
deepen
customer
relationships
and
to
drive
customer
lifetime
value.
As
for
example,
by
extending
our
long
distance
shipping
offer,
expanding
and
scaling
our
premium
service
offering
for
Zalando
Plus,
by
our
ongoing
efforts
to
offer
more
sustainable
packaging.
In
2021,
our
marketing
cost
ratio
increased
year-over-year
as
we
remained
focused
on
customer
acquisition
and
engagement
investments,
supported
by
our
[ph]
AI (00:46:19)
based
marketing
approach
and
ran
major
launch
campaigns
across
our
six
new
markets.
In
the
fourth
quarter
of
the
year,
we
reduced
our
marketing
costs
in
absolute
and
in
relative
terms
compared
to
prior
year,
mainly
due
to
lower
brand
marketing
investments.
Last
but
not
least,
our
admin
costs
continued
the
positive
trend
observed
throughout
the
year,
driven
by
increasing
economies
of
scale
and
continuous
efficiency
improvements.
As
a
result,
our
adjusted
EBIT
margin
decreased
by
0.8
percentage
points
year-over-year
to
4.5%
in
2021.
Excluding
the
temporary
positive
impact
from
lower
return
rates,
the
pro
forma
2021
margin
would
have
been
3.4%
in
2021,
compared
to
3.8%
in
2020.
Since
we
continue
to
expect
a
normalization
of
return
rates
over
time
and
given
the
significant
impact
of
returns
on
our operating
margins,
we
believe
this
pro
forma
measure
provides
you
with
a
better
view
of
our
underlying
profitability
development.
Turning
to
cash-related
items,
we
recorded
a
sizable
decrease
in
our
net
working
capital
position
year-over-year.
The
main
driver
behind
this
development
is
a
relatively
stronger
increase
in
trade
payables
than
in inventories
and
receivables,
as
a
result
of
the
strong
growth
momentum
in
our
partner
business.
Reflecting
our
continued
investment
into
our
technology
and
infrastructure
to
enable
our
growth
trajectory,
capital
expenditure
significantly
increased
year-over-year,
both
for
the
full
year
and
the
fourth
quarter.
Mainly
due
to
the
strong
decrease
in
net working
capital
and
due
to
our
strong
operating
cash
flow,
we
recorded
a
positive
free
cash
flow
of
€283
million
for
2021,
broadly
in
line
with
the
previous
year
despite
higher
capital
expenditure.
Our
cash
balance
amounted
to
around
€2.3
billion
at
the
end
of
Q4.
Let
me
close
this
presentation
by
providing
you
with
more
information
regarding
our
2022
outlook.
Over
the
past
24
months,
we
have
experienced
an
exceptional
operational
and
financial
performance
acceleration.
As
European
consumers
and
economies
are
gradually
returning
back
to
a
new
normal,
we've
seen
our
growth
rates
starting
to
normalize
as
well.
Looking
ahead
at
2022,
we
expect
to
grow
GMV
by
16%
to
23%
and
to
add
€2
billion
to €3
billion
additional
GMV.
On
a
two-year
CAGR
for
the
years
2021
and
2022,
our
GMV
outlook
implies
a
growth
range
of
25%
to
28%,
ahead
of
our
mid-term
target
growth
corridor
of
20%
to
25%.
In
line
with
our
platform
transition
strategy
and
increasing
share
of
the
Partner
Program,
we
expect
revenue
growth
to
trail
GMV
growth,
resulting
in
revenue
growth
of 12%
to
19%.
Similar
to
last
year,
this
growth
will
not
be
evenly
distributed
across
quarters.
As
we
are
lapping
exceptionally
strong
performance
of
46%
GMV
growth
in
the
first
half
of
2021,
we
expect
lower
than
usual
year-over-year
growth
for
Q1
and
Q2.
With
easing
baseline
effects
in
the
final
six
months
of
the
year,
we
expect
our
growth
to
reaccelerate
significantly,
implying
a
comparatively
stable
two-year
CAGR
for
the
entire
year.
Looking
at
profitability,
we
expect
an
adjusted
EBIT
of
€430
million
to
€510
million,
implying
a
margin
of
3.7%
to
4.1%,
which
is
well
in
line
with
our
midterm
guidance
issued
last
year
at
our
Capital
Markets
Day
to
start
2022
in
the
lower
half
of
our
3%
to
6%
corridor.
Compared
to
2021,
this
implies
a
slight
margin
decrease
as
the
prior
year
benefited
significantly
from
temporarily
lower
return
rates,
which
we
continue
to
expect
to
normalize
over
time.
For
cash
related
items,
we
expect
negative
net working
capital
and
capital
expenditure
of
€400 million
to
€500
million
to
fund
our
continued
investments
into
our
logistics
infrastructure
and
our
technology
platform,
which
are
among
the
key
enablers
of
our
2025
growth
ambition.
Next
to
the
continued
execution
of
our
strategy
and
our
through-cycle
investments
to
drive
long-term
value
creation,
our
2022
guidance
also
reflects
our
exceptionally
strong
growth
in
2021,
as
well
as
a
more
volatile
market
environment,
driven
by
three
key
factors:
first,
weakening
consumer
sentiment
linked
to
the
economic
outlook
and
current
geopolitical
tensions,
as
well
as
a
wait-and-see
approach
as
the
pandemic
continues
to
evolve;
second,
continued
supply
chain
disruptions
causing
supply
shortages
in
certain
areas,
particularly
in
sneakers,
footwear
and
sports;
and
third,
rising
inflation
concerns, which
might
have a
further
dampening
effect
on
consumer
demand in
general and
discretionary spending
in
particular.
While
these
same factors
have
been affecting
our performance
year-to-date,
uncertainty
remains
with regards
to
the
duration and
magnitude
of
the
impact
these
temporary
market
developments
will
have
on
our
business
throughout
the
rest
of
the
year.
To
reflect
this
higher
than
usual
degree
of
uncertainty,
we've
chosen
to
broaden
our
guidance
ranges
for
2022.
In
addition,
this
slide
provides
you
with
more
transparency
on
potential
performance
scenarios
and
how
the
different
macroeconomic
factors
might
result
in
us
moving
towards
the
low
or
the
high
end
of
our
guidance.
While
we
will
not
be
able
to
fully
isolate
ourselves
from
these
temporary
market
developments,
we
are
confident
that
just
like
in
the
past,
our
platform
business
model
will
prove
to
be
resilient
and
will
enable
us
to
respond
to
these
short-term
challenges.
Our
strong
brand
relationships
will
help
us
to
secure
access
to
stock,
while
our
platform
model
will
allow
us
to
dynamically
adjust
our
offer,
our
stock
levels
and
our
logistics
capacities
to
various
demand
scenarios.
Furthermore,
we
will
rely
on
an
agile
business
steering
approach,
as
well
as
continued
efficiency
improvements
to
deliver
strong
performance
and
to
continue
to
outgrow
the
European
online
fashion
segment.
Let
me
close
this
presentation
by
reiterating
that
we
are
truly
excited
about
the
immense
growth
opportunity
ahead
of
us.
We
remain
laser
focused
on
our
long-term
vision
to
be
the
starting
point
for
fashion
and
on
our
2025
ambition
to
build
a
sustainable
platform
business
with
more
than
€30
billion
in
GMV,
maximizing
long-term
value
for
our
customers,
our
partners
and
our
shareholders.
That
concludes
our
deep-dive
session.
Let's
now
jump
into
Q&A.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
Good
morning
and
welcome
to
our
Q&A
session
today.
With
me
are our
Co-CEO,
David
Schneider;
and
our
COO,
David
Schröder,
virtually
also
our
Co-CEOs,
Robert
is
there.
Before
we
begin,
David
would
like
to
deep
dive
and
to
share
a
few
words
with
you.
D
David Schneider
Co-Chief Executive Officer, Zalando SE
Yeah.
Usually,
the
publication
of
the
annual
report
and
our
end
of
year
financials
is
a
special
moment
for
us.
However,
this
year,
honestly,
it's
a
bit
hard
for
us
to
stand
here
as
if
it's
business
as
usual,
as
we
watched
the
war
in
Ukraine
unfold.
Our
hearts
and
minds
are
with
the
Ukrainian
people
and
of
course,
all
our
employees,
their
families
and
friends
who
are
directly
or
indirectly
affected.
Our
priority
is
to
help
them
as
much
as
we
can.
We're
supporting
our
impacted
employees
and
their
families
with
counseling,
visas
and
travel
support,
but
we're
also
committed
to
helping
out
those
impacted
however
we
can
through
financial
and
in-kind
donations,
volunteering,
and
support
for
refugees.
We
truly hope
that
the
path
to
peace
can
be
found
quickly.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
Thanks,
David.
Under
these
circumstances,
it's
indeed
difficult
to
think
about
[ph]
much
else (00:54:50)
at
the
moment.
However,
there
are
things
we
cannot
postpone,
such
as
the
financial
reporting,
and
we
want
to
give
you
the
opportunity
to
share
questions
with
us.
Directly
linked
to
that,
David,
can
you
comment
on
the
impact
you
are
seeing
from
that
situation,
David
just
described
on
our
business
directly
as
well
as
indirectly?
D
David Schröder
Chief Financial Officer, Zalando SE
Sure,
I
can.
I
mean,
first
of
all,
it's
important
to
understand
that
there's
no
direct
impact
since
we
don't
have
operations
there.
We
have
a
private
label
supplier
working
with
a
local
factory
in
the
western
Ukraine.
But
otherwise,
there's
no
Zalando
business
footprint
over
there
and
therefore
there's
also
no
direct
impact
on
the
business.
What
we've
seen,
however,
unfold
over
the
past
couple
of
days
in
particular,
is
a
significant
indirect
impact,
especially
when
it
comes
to
our
business
in
Central
and
Eastern
Europe.
We
operate
in
8
eastern
European
countries
out
of
the
23
markets
we
serve
overall.
In
these
markets,
we
have
definitely
seen
that
consumer
sentiment
was
affected
quite
significantly
over
the
past
few
days,
which
I
think
is
understandable,
because
people
probably
have
different
things
on
their
mind
at
the
moment
than
shopping
fashion.
And
that's
why,
we'll
continue
to
closely
monitor
the
situation
and
obviously
adjust
our
business
steering
accordingly.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
David,
switching
a
little bit
and
trying
to
switch
gears
a
bit
towards
you,
Robert.
There
has
been
two
years
of
big
acceleration
of
e-commerce
adoption.
Do
you
see
another
decade
of
growth
for
Zalando?
R
Robert Gentz
Yeah,
yeah.
I
think
certainly,
I
see
another
decade
of
growth
for
Zalando.
So,
[ph]
it's not
like (00:56:48)
our
mid-term
ambition
is to
achieve
more
than
€30 billion
by
2025.
So,
that's
more
than
double
as
much
as
we
have
done
like
in
2021. On
long-term,
we
see
ourselves
in
a
position
to
serve
more
than
10%
of
the
European
fashion
market,
and
we're
very
convinced,
working
very
hard
in –
on
this
growth
path
and
yeah,
and
I
think
that's
where
we're
going.
And
I
guess
the
last
three
years,
they
have
suddenly
accelerated
the
shift
towards
online
and
prepared
us
well
ahead
on
this
path
– on
this
growth
path.
And
as
a
company,
we
use
these
tailwinds
very
wisely
and
did
a
great
job
in
our
customer
proposition
work,
market
expansion
and
that's
what
drove
customer
loyalty,
as
we
have
shared
with
the
Zalando Plus
milestone
that
we've
hit.
So –
yeah,
and
as
David
said,
like
2022
will
certainly
or
very
likely
be
a year
with
more
volatility
than
usual
[indiscernible]
(00:57:45) these
technical
baseline
effects
from
prior
year.
Yet,
I'm
very,
very
confident
that
with
our
great
team,
the
proven
platform
model,
our
– and
our
knowledge
of
how
to
agile
way to
steer
our
business.
We're
very
well
positioned
to
navigate
it
well.
And
our
strategy
is
strong,
our
team
is
strong. And
yeah,
and
I'm
very
convinced
on
our
long
term. So,
our
next
step is
€20 million,
€30
billion
by
2025,
and
that's
very
much
our
focus.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
Thanks,
Robert.
And
going
exactly
into
that
direction,
there's
a
question
coming
from
Charlie
Muir-Sands
from
Exane
on
deepening
customer
relationship
and
what's
the
causing
effect
of
our
Zalando
Plus
members
spending
3
times
more?
Are
they
signing
up
to
Plus
because
they
already
have
the
– are
our
highest
spending
customer
or
is
there
a
strong
sales
uplift
after
they
sign
up?
R
Robert Gentz
Yeah.
I
think
it's
a
– that's
a
great
question. It's
something
that
obviously
we
are
very
– which
is
very
well
researched
and
understood
at Zalando.
So,
there,
what
is actually
correlation
effect,
what's the
causality
effect,
I
can
tell
you
there's
a
big
causality
effect,
so
which
is
what
makes
sense.
If
you
have
this
customer,
if
you
actually
commit
to
paying
like
on
an
annual
membership
for
service,
yes,
I want
to
use
this
more.
So,
there's
the
causality
effect
that
actually
drives
more
frequency
of
visits that
drives
more
frequency
of
sales.
And
this
is
what
we
see
now.
And
that
is why
we're
always
so
focused
and
–
on
driving
our
Plus
membership
program
into
more
success,
because
of
this
causality,
because
the
causality
that's
driving
deep
relationships.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
Well,
thanks
a
lot.
Yeah,
going
away
from
deepening
to
more
current
topics
on
the
GMV
guidance
we
published
today,
David,
could
you
talk
us
through
the
assumption
that
you
get
to
the
higher
and
lower
of
the
range
here?
D
David Schröder
Chief Financial Officer, Zalando SE
Sure.
So,
first
of
all,
let
me
repeat
that
we,
as
Robert
said,
expect
to
continue
our
journey
in
2022
and
continue
to
deliver
strong
growth
in
terms
of
GMV
that
will
be
between
16%
and
23%.
And
I
think
that
is
basically
reflecting
three
things.
First
of
all,
it's
reflecting
a
very
strong
foundation.
We have
by
no
more
than
48
million
active
customers,
partnerships
with
more
than
5,800
brands.
Numbers
that
have
significantly
increased
over
the
past
two
years
as
consumer
demand
shifts
accelerated
towards
online
and
also
brands
focused
even
more
on
digital
channels.
And
I
think
that
sets
us
up
for
now,
continuing
to
drive
strong
performance
of
the
business
going
forward.
The
second
thing
that
we
obviously
need
to
consider
is
the
very
strong
baseline
of
last
year,
particularly
in
the
first
half.
So,
for
those
of
you
remember,
we,
for
example,
reported
56%
growth
in
GMV
in
Q1
last
year.
We
also
reported
46%
in
GMV
growth
for
the
full
first
half,
and
that
obviously
means
when
we
now
lap
these high
baselines
in
the
first
half
that
our
growth
will
be
rather
lower
in
the
first
half
and
higher
in
the
second
half
of
the
year,
because
in
the
second
half
of
last
year,
we
saw
things
normalize
and
therefore
also
are
up
against
more
normal
baselines.
And
then,
the
third
fact
that
I
think
Robert
also
mentioned
and
we
discussed
quite
a
bit
also
in
the
keynote
and
the
performance
deep
dive
today
is
that
we
expect
a
more
volatile
market
environment,
primarily
driven
by
weakening
consumer
sentiment,
by
continued
supply
chain
challenges
and
also
by
rising
inflation
concerns.
We
expect
that
most
of
these
will
be
more
pronounced
in
the
first
half
and
probably
gradually
improve
or
even
fade
away
in
the
second
half,
and
that
is
obviously
also
reflected
in
the
guidance
range.
And
quite
frankly,
it's
also
the
reason
why
the
guidance
range
is
a
bit
wider
than
usual.
And
so,
the
best
way
to
think
about
the
lower
end
and
the
higher
end,
I
think
this
year
is
to
say,
if
these
effects
fade
away
quickly,
then
we
will see
our
growth
rates
move
more
towards
the
higher
end.
The
longer
those
effects
persist,
the
more
likely
it
becomes
that
we'll
tend
towards
the
lower
end.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
Yeah.
Thanks
for
that.
And
full
year
picture
also,
always
a
recurring
question
is
like,
when
looking
into
the
current
trading,
do
you
have
already
first
comments
you
can
share
here
that
would
be
highly
appreciated.
D
David Schröder
Chief Financial Officer, Zalando SE
Yeah,
I
think
coming
back
to
what
I
just
said,
I
think
there
are
certainly
almost
the
same
effects
to
take
into
account
for
Q1
that
we
just
talked
about
for
the
full
year.
So,
for
Q1
in
particular,
I
think
we
have
a
super
strong
baseline
with
55%
or
56%
GMV
growth
even
last
year.
That,
for
sure,
will
mean
lower
growth
in
Q1
this
year
on
a
year-over-year
basis.
At
least,
on
the
second
effects
or
more
volatile
market
environments,
as
I
just
explained,
we
also
expect
those
effects
to
be
more
pronounced
in
Q1
and
Q2
and
therefore
also
leading
to
lower
growth
rates
for
Q1
and
the
first
half.
And
then,
last
but
not
least,
as
we
briefly
mentioned
in
the
beginning,
we've
seen
some
early
indirect
negative
impact
from
the
war
in
the
Ukraine,
and
that
will
most
likely
also
have
an
impact
on
Q1.
What
does
it
mean
overall?
Overall,
I
think
it
means
that
for
Q1,
we
should
expect
to
see
our
GMV
growth
be
in
line
with
the
two-year
CAGR
that
we
project
for
the
full
year.
So,
for
the
full
year,
we
told
you
today
in
our
presentation
that
we
aim
for
a
two-year
GMV
CAGR
of
between
25%
and
28%,
which
is
above
our
mid-term
GMV
growth
corridor
of
20%
to
25%.
So,
still
continue
to
expect
very
strong
growth
and
we
expect
to
land
in
the
same
two-year
CAGR
range
for
Q1.
When
we
then
briefly
turn
to
profitability,
I
think
there,
you
should
probably
have
in
mind
the
typical
seasonality
for
our
business
outside
of
maybe
corona
times,
which
is
that
Q1
and
Q3
are
typically
a
bit
softer,
have a
breakeven
or
even
slightly
negative,
whereas
Q2
and
Q4
are
most
profitable
quarters,
because
they
also
have
the
highest
share
of
full
price
sales.
And
then,
obviously,
there
are
some
additional
negative
impact
to
be
expected
this
time
due
to
the
short-term
developments
that
I
just
called
out.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
On
the
short-term
developments
and
looking
into
your
eyes,
David,
is
like
supply
chain
inventory
shortages.
So
can
you
quantify
the
impact
on
sales
we
are
seeing
for
this
quarter,
or
the
upcoming
quarters
perhaps
any
color
you
can
give
here?
D
David Schneider
Co-Chief Executive Officer, Zalando SE
Of
course,
there
is
an
effect
which
is
real
due
to
COVID
in
the
supply
chain
and
also
due
to
transport.
Many
of
our
brand
partners
have
also
commented
on
the
challenges.
So
we
see
them
in
certain
areas,
especially
when
it
comes
to
sneakers,
footwear,
sportswear
where
it's most
prevalent.
So,
therefore
this
season,
spring-summer
2022,
we
do
see
the
effects,
although
the
effects
are
less
than
we
expected
them
to
be
last
year.
And
we
also
see
improvements,
and
we
also
expect
it
to
improve
throughout
the
year.
We'll
have
to
monitor
closely
like
what
happens
to
fall
winter
2022.
But
that
said,
I
think
also
as
a
platform,
we're
very
well-positioned
as
we
work
with, yeah,
close
to
6,000
brands.
And
I
think
we
can
balance
because
in
our
assortment
we
are
broad,
we
can
have
the
full
range.
We
can
work
through
wholesale,
through
Partner
Program,
through
Connected
Retail
in
order
to
create,
like,
access
for
customers.
And
then
on
top,
of
course,
we're
also
very
close
dialogue
with
our
core
brands
to
monitor
what's
happening
and
to
be
able
to
react,
if
necessary.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
Yeah.
Thanks
a
lot.
Moving
away
from
current
trading
and
looking
more
into
the
future
into
our
platform
strategy,
perhaps
to
you,
David.
When
we're
looking
to
our
Partner
Program
in
more
detail,
can
you
discuss
the
drop-through
of
the
2022
EBIT
margins
will
be
slightly
up
on
2019,
despite
the
Partner
Program
contribution
of
more
than
€1
billion
in
2021?
Why
aren't
we
seeing
that
on
a
gross
margin
or
even
in
EBIT
level
yet?
D
David Schröder
Chief Financial Officer, Zalando SE
Yeah.
Let
me
take
this
opportunity
to
maybe
take
a
broader
look
at
the
progress
of
the
platform
transition,
right.
So
as
David
and
I
mentioned
in
the
presentations
today,
we
see
continued
strong
progress
on
our
way
to
become
a
platform
business.
We
see
Partner
Program
and
Connected
Retail
growing
by
more
than
75%
year-over-year
and
ZFS
and
ZMS
are
key
enabling
services
growing
even
faster.
And
I
think
that's,
obviously,
a
key
proof
point
that
we
are moving
in
the
right
direction
and
we
also
are
well
on
track
to
reach
our
2025
targets
that
relate
to
the
platform.
I
think
what
is
also
actually
great
news
for
us
that
for
2021
for
the
first
time,
our
non-merchandise
revenue
exceeded
€1
billion
and
I
think
that
is,
in
a
way,
the
result
of
the
progress
we're
making
with
our
platform
business.
I
think
it's
also
important
to
consider
though,
that
it's
one
out
of
more
than €10
billion
by
now, right.
So
it's
the
business
or
the
P&L,
and
especially
the
revenue
line
is
still
dominated
by
our
wholesale
business
model.
And
I
think
that's
one
key
explanation
why
you
don't
really
see
the
progress
of
the
platform
transition
as
much
in
the
P&L
as
you
will
see
it
in
future
years,
and
as
we
have
also
talked
about
it
when
we
think
about
our
long
term
target
margin.
That
being
said,
I
think
obviously
we
remain
committed,
both
to
our
long-term
model,
where
we
project
20%
to
25%
target
margin
for
the
partner
business,
and
also
to
our
mid-term
margin
ambition
to
move
closer
to
6%
by
2025.
And
that
will
be
largely
driven
by
our
continued
progress
with
the
platform.
To
just
maybe
talk
about
one
last
key
item
that
I
wanted
to
mention,
when
we
look
at
the
profitability
development
or
also
profit
contribution
of
our
platform
business
year-over-year,
and
also
as
it
stands
for
2021,
there
are
two
key
messages.
First
of
all,
it
is
already
highly
accretive
to
the
group
margin.
And
second
of
all,
the
profitability
has
increased
year-over-year,
and
therefore,
we
are
definitely
also
on
track
to
reach
our
long-term
margin
targets
for
that
part
of
our
business.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
Thanks,
David.
Going
more
into
the
Partner
Program
and
there's
a
question
coming
from
Miriam
from
Morgan
Stanley.
What
explains
the
difference
in
our
Partner
Program
share
we
are
seeing
across
different
markets?
Is
it
simply
scale
or
maturity?
And
how
does
this
trajectory
of
our
Partner
Program
in
newer
markets
compare
to
our
home
market
here
in
Germany?
D
David Schneider
Co-Chief Executive Officer, Zalando SE
I
mean,
first
to
note
that
Zalando,
of
course,
also
the
Zalando
penetration
looks
different
across
different
markets.
So
I
think
there
is also
like
the
Zalando
maturity
in
certain
markets
that
play
a
role.
Then
our
partners
now,
of
course,
they
also
have
to
develop
the
capabilities
to
ship
internationally,
which
is
usually
a
challenge
to
actually
have,
like,
the
right providers
and all
the
connections
and
place
you
need,
which
is
also
exactly
a
reason
why
we
offer
ZFS.
And
then
believe
very
much
in
our own
logistic
networks
to
actually
help
partners
get
there
because
that
is
actually,
this
offers
like
all
our
European
markets
to
partners
quite
immediately.
We
also
see
a
strong
traction.
And
you
see
also
like
if
you
solve
these
challenges
for
partners,
how
it
then
develops
very
quickly.
I
mean,
if
we
look
at,
for
example,
Switzerland,
how
it
develops
once
you
overcome
like
the
hurdle
for
partners
and
offer
them,
through
ZFS,
like,
an
easy
way
in.
That
you
also
see
like
the
Partner
Program
share
developing
very
quickly.
And
I
think
in
future,
so
we
see
markets
that
will
develop
fairly
quickly
on
the
Partner
Program
share.
We
also
see
a
big
lever
to
actually
offer
really
relevant
assortment
locally.
For
example,
in
Spain,
we
even can
utilize
like
the
Connected
Retail
proposition
to
which
we
get
access
to
locally
relevant
assortment
and
offer
that
locally
to
customers.
So
I
think
it's
a
big
lever
also
for
us
to
be
even
more
relevant
in the
specific
markets.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
Yeah.
I
think
that
was
a
good
hint. And
also
somebody
already
assumed
some
kind
of
a
question
here.
We
are
also
providing
more
logistic
services
for
our
brand
partners.
What
kind
of
additional
service
can
we
exactly
give
to
these
Connected
Retail
partners?
What
is
here
in
our
minds
and
what
are
we
able
to
share
here
already?
Not
sure.
David?
D
David Schröder
Chief Financial Officer, Zalando SE
Yeah.
Happy
to
jump
in
here.
So
obviously,
the
type
of
logistics
service
that
enables
connected
retailers
is
a
bit
different
from
the
type
of
logistics
service
that
we've
built
for
our
brands,
because
those
stores
essentially
are
small
fulfillment
centers.
That's
the
whole
beauty
of
the
model,
and
therefore,
they
don't
require
as
much
help
with
warehousing
as
our
brand
partners
do
when
they
use
ZFS,
but
they
definitely
can
benefit
from
our
capability
in
the
area
of
shipping
and
returns.
And
that's
why
we
are,
especially
for
2022,
now
we're
very much
focused
in
making
sure
that
we
can
support
them
with
more
efficient,
more
convenient
and
also
more
economical
returns
handling,
which
we
think
will
make
the
model
much
more
attractive
for
many
of
them,
given
that
the
cost
to
serve
can
be
dramatically
reduced.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
Thanks.
Sticking
with
logistics
also
kind
of
an
evergreen
here,
when
we
talk
about
our
logistic
platform
to
grow
our
GMV
by
€4
billion
per
year,
we
also
need
to
add
three
to
four
new
distribution
centers
every
year. But
apparently,
some
outsiders
don't
seem
that
we
are
on
track,
on
pace
here.
So
perhaps
you
can
comment
on,
are
we
getting
enough
throughput
via
our
existing
network?
D
David Schröder
Chief Financial Officer, Zalando SE
So,
I
think
our
existing
network
is
well
set
up
to
support
current
business
volumes
and
also,
obviously,
the
growth
for
the
year
to
come.
Please
don't
forget
we
just
at
the
end
of
last
year
took
online
a
completely
new
facility,
the
biggest
so
far
close
to
Rotterdam
and
the Netherlands,
which
gives
us
ample
of room
for
growth.
And
we
are,
obviously,
continuing
our
ambitious
network
buildout
program,
which
aims
to
add
more
than
seven
additional
warehouses
by
2025.
Several
projects
are
underway
in
France,
in
Germany
and
in
Poland.
All
those
have
been
announced
last
year
and
we
are
working
on
a
few
more
that
will
be
announced
soon.
So
from
our
perspective,
our
network
build
out
is
well
on
track
and
even
so
well
on
track
that
we
announced
today
that
we
also
now
feel
comfortable
to
open
up
our
network
to
support
our
brand
partners
also
across
more
channels
than
just
Zalando.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
Yeah,
exactly.
Also
another
question
exactly
on
that
last
sentence
by
David
to
you,
David
Schneider.
Could
you
talk
a
little bit
more
about
the
outsourcing
of
the
logistic
to
brand
partners
and
how
this
will
be
chart
for,
will
it
be
the
same
way
as
Zalando
Fulfillment
Services,
(sic) [Zalando Fulfillment Solutions] (01:15:14) so, as
a
cost
plus
model?
And
what
is
the
level
of
adoption
that
could
be
here.
So
perhaps
any
thoughts
you
can
share
here?
D
David Schneider
Co-Chief Executive Officer, Zalando SE
I
mean,
we've
–
also
like
in
the
past
years,
we've
been
in
a
lot
of
discussion
with
our
brands.
How
can
we
how
can
we
actually
open
up
our
capabilities
more
and
more
now,
yeah. And
to
close our
work
together,
I
mean,
we
know
brands
invest
into
the
direct-to-consumer
approach.
And
of
course,
they
ship
not
only
like
through
Zalando,
but
also
through
their
own
income
and
other
channels.
So
what
we
see
is
that
–
by
opening
our
capabilities
as
we
have
really
the
best
network
for
fashion,
for
fashion
logistics,
why
not
open
that
up
and
actually
help
brands
to
really
also
go
more
direct
to
consumer.
Because
I
think
that's
how
we
want
to position
ourselves
with
brands
to
enable
their digital
business
and
be
part
of
their really
digital
strategy
and
not
creating
any
barriers.
And
I
think
there is
like
very
clear
wins,
I
mean,
for
partners.
Again, it
gives
them
access
to,
like,
all
our
markets
all
over
Europe.
I
think, obviously,
in
combination
with,
like,
having
Zalando
as
a
strong
channel
for
them
that
also
creates,
like,
being
able
to
consolidate
parcels.
Yeah.
I
think
also
a
lot
of
economic
benefits
that
are
in
there.
Yeah.
And
of
course,
they
can
make
use
of
like
all
these
convenience
investments
in
innovation,
also
from
the
sustainability
angle.
All
these
investments
will
go, yeah,
across
Europe
across
all
brands,
they
can
make
use
of
that.
At
the
same
time,
I
think
we
also have
the
benefits,
yeah,
or
our
customers
have
the
benefits
as
we
tap
into
better
availability,
stronger
inventory
pools,
and
again,
I
think
also
the
strong
benefits
for
partners.
We
do
not
have
to
split
inventories
in
that
sense,
which
makes,
of
course,
a
big
effect.
And
you
can
say
that
brands
do
not
like
to
fragment
their
inventory.
Yeah.
So,
we
believe
that
this
strong
win
win
win,
yeah.
And
that's
again,
our
partners
win
and
I
think
for
customers,
we
have
a
strong
benefit.
And
I
think
for
us,
of
course,
it's
also
interesting
to
build
out
like
really
this
infrastructure,
and
which,
of
course,
is
also
like
a
great
business
model
to
build
on
for
us
in
future.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
Yeah.
Thanks
for that.
There's
also
financially
related,
just
coming
another
warehouse
question
on
from
Adam
from
Deutsche
Bank.
Perhaps,
David,
you
can
comment
broadly
on
that
like
what
is
the
return
on
capital
for
spending
CapEx
on
a
new
distribution
center
and
fulfilling
the
logistics
for
partners. Is
this is
only
available
if
they
sell
enough
product
via
Zalando
and
perhaps
any
thoughts
you
may
share
here?
D
David Schröder
Chief Financial Officer, Zalando SE
Yeah.
Sure. So,
obviously,
when
we
evaluate
these
projects
and
take
decision
on
such
a
large
CapEx
spending,
we
take
a
very
close
look
at
the
business
sketch
for
each
of
these
locations.
And
although
I,
obviously,
cannot
go
into
a
lot
of
detail
here,
what
I
can
confirm
is
that
all
these
projects
come
with
a
very
attractive
and
high
NPV,
and
they
also
come
with
a
super-fast
payback,
for example,
in the
automation
technology, which
is
really
the
bulk
of
the
CapEx
investment
that
we
are
talking
about
here
which
typically
pays
itself
in
just
three
to
four
years,
whereas
we
can
use
the
facility
for
much
longer,
and
I
think
that
gives
you
an
indication
of,
yeah,
the
return
on
capital
for
such
projects.
And
for
sure,
as
we've
mentioned
today,
this
offer
will
not
be
limited
to
partners
selling
on
Zalando.
It
will
also
be
open
for
partners
to
use
for
other
channels.
Obviously,
we
would
expect
most
partners
to
find
it
very
useful
that
they
can
also
tap
into
the
large
customer
base
that
we
can
offer
at
Zalando,
but
it's
not
a
prerequisite
as
such.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
Cool.
Thanks
a
lot.
A
little
bit
related
to
logistics,
but
also
evergreen
here
at
Zalando
is
like
return
rates.
Now,
we
have
been
seeing
a
big
benefit
over
last
two
years.
Perhaps,
David,
you
can
comment
on
like,
does
the
2022
guidance
include
a
continued
benefit
from
lower
return
rates?
So
that's
the
first
one.
And
then
perhaps
also
a
little
bit
comment
on
the
marketing
spend
as
a
percentage
of
sales
given
that
more
volatile
consumer
demand
environment
you
also
flagged
and
others
are
also
seeing
you.
D
David Schröder
Chief Financial Officer, Zalando SE
Sure.
So,
in
terms
of
return
rates,
we
definitely
assume
an
ongoing
normalization
and
therefore
only
a
minor
or
smaller
impact
on
2022.
Overall,
we
actually
expect
our
fulfillment
cost
ratio
to
increase
in
2022,
driven
by the
normalization
of
return
rates,
but
also
by
our
continued
investments
to
drive
convenience
for
Plus
members
and
also
to
make
our
operations
and
services
more
and
more
sustainable,
for
example,
in
the
area
of
sustainable
packaging.
When
we
think
about
our
marketing
expenses
for
this
year,
we
assume
a
rather
flat
development
year-over-year.
But
as
we
have
repeatedly
stressed
today,
we
are
still
a
business
in
a
very
agile
manner.
And
as
you
know,
if
you
follow
us
for
a
while
now,
we
are
steering
marketing
primarily
based
on ROI.
And
so
we
are
not
sticking
to
a
pre-determined
budget,
but
we
will rather
adjust
our
spending
according
to
the
opportunities
that
we
see
in
the
market.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
Thanks.
[indiscernible]
(01:21:15)
moving
away
a little
bit
from
logistics,
going
more
into
also
our
longer
term,
there's
a
question
on
ZMS
and
Robert,
I
think
you
are
the
right
one
to
answer
that
one,
it's
like,
can
you
expand
and
explain
a
bit
further
what
roles
ZMS and
other
Zalando
data
services,
data
[ph]
monetization
(01:21:35) in
general
will
play
in
our
starting
point
for
fashion
strategy?
R
Robert Gentz
Yeah.
Sure.
So
like,
as
our
platform
proposition
towards
customers is
kind
of
expanding
and
we
want
eventually
like
every
fashion
item
to
be
available
on
our
propositions.
There
is
[ph]
as well
like,
a
question,
like,
how –
what's
(01:21:54) actually
the
most
effective
way
that
actually
brands
can
as well engage
with
customers
as
well
on
Zalando
and
how
can
actually
tell
their
stories,
especially
in
the
environments
[ph]
like
where
it is
(01:22:07), I
think,
a
lot
of
offer
available
and
this is
really
where
the
ZMS
service
actually
helps
our
brand
partners
to
tell
their
story,
tell
their
brand
and
as
well
shed
more
light
on
specific
articles
that
they
want,
like,
customers to
more
engage
with.
So
this
is
the
purpose
of
ZMS.
And
as
we
have
highlighted in
our
long-term
work,
we
assume
this
would
be
like
in
the
area
of
our
3%
to
4%
of
the GMV,
will be
like
the
ZMS
in terms
of
our
platform
proposition
and
we
are
– yeah,
and
we
are
very,
very
happy
so
far
with
the
developments
of
how
[ph]
ZMS (01:22:48)
business
actually –
yeah,
[ph]
is
assumed
by (01:22:51)
the
brand
partners.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
Thanks,
Robert.
Then
there's
also
another
question
coming
from
Christian
from
Hauck & Aufhäuser.
David,
given
your
comfortable
net
cash
position,
how
do
you
think
about
inorganic
growth
and
where
would
you
see
possibilities
for
acquisition
[indiscernible]
(01:23:11)
and
beauty
or
tech?
D
David Schröder
Chief Financial Officer, Zalando SE
Well,
first
of
all,
I
think
it's
great
to
have
that
comfortable
cash
position
as
you
call
it,
because
[ph]
and then (01:23:22)
really
enables
us
to
take
that
true
cycle
long-term
view
on
the
business,
right,
and
to
make
sure
that
we
can
actually
make
all
the
necessary
investments
that
allow
us
to
achieve
our
mid-term
ambition
of
€30
billion
GMV in
2025
and
also
our
long-term
ambition
of
serving
more
than
10%
of
the
total
European
fashion
market.
Apart
from
that,
you'll
see
us
mainly
investing
into our
own
infrastructure
and
in
our
capabilities,
obviously,
also
our
technology
platform
as
part
of
these
capabilities.
Yes,
we
are
most
likely
continue
to
also
look
at
inorganic
opportunities,
but
primarily
those
that
help
us
advance
when
it
comes
to
building,
scaling
and
innovating
our
capabilities.
So,
for
example,
the
last
acquisition
that
we
did
was
around
Size
and
Fit,
and
I
think
you
should
expect
us
to
do
similar
acquisitions
in
the
future
when
they
can
help
us
accelerate
our
journey
towards
being
the
starting
point
of
fashion.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
Okay,
thanks.
Before
coming
back
a
little
bit
to
our
current
and
2022
outlook,
perhaps
another
more
strategic
question
sticking
with
you,
David,
on
a
second
is
like
our
financial
capabilities
and
probably
mainly
referring
here
to
our
Zalando
payments
offering.
Do
you
see
any
potential
to
include
this
as
a
service
to
brands
as
part
of
the
Partner
Program
over
time?
D
David Schröder
Chief Financial Officer, Zalando SE
Well,
the
thing
is,
all
the
brands
and
also
connected
retailers
that
participate
in
our
platform
use
our
payments
service
by
default,
right.
So
it
is
actually
part
of
our
Partner
Program
and
Connected
Retail
offer
and
part
of
the
reason
why
brands
and
connected
retailers
pay
a
commission
to
us.
So,
part
of
that
commission
is
a
payment
services
related.
But
I
think
it's
still
a
good
question,
because
we
definitely
see
that
we've
built
a
very
strong
payments
capability.
We
process,
yeah,
more
than
€20
billion
transaction
volume
through
our
internal
payment
systems,
and
we've
also
built
a
very
strong
buy
now
pay
later
offering,
which
actually
accounts
for
more
than
two-thirds
of
their
payment
volume. It's
the
most
popular
payment
method
for
our
customers
and
many
of
our
markets,
and
it's
also
something
that
has
obviously
helped
us
to
drive
both
customer
satisfaction
and
also
conversion.
And
therefore,
we
definitely
are
evaluating
different
opportunities
on
how
we
can
leverage
this
strong
capability,
particularly
in
the
area
of
buy
now,
pay
later,
and
also
find
ways
to
offer
that
to
partners
also
outside
of
Zalando.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
Okay,
thanks
a
lot,
David.
And
looking
into
a
little
bit
more
to
the
brands
itself,
there
was
also
a
question
again
from
Charlie,
from
Exane
PNB.
Would
you
also
consider
helping
brands
with
their
e-commerce
technology
as
well
as
the
logistics?
[indiscernible]
D
David Schneider
Co-Chief Executive Officer, Zalando SE
01:26:33)
beyond
logistics,
I
think,
logistics
and
I
think
it's
a
very
strong
and
clear
value-add
for our
partners.
And
that's
why
we
want
to open
that
up
and
then
really
enable
brands
not
only
for
our
channel
also
across
like
different
touchpoints,
but
like
marketing,
for
example,
is
also
a
good
example.
With
ZMS,
I
think
we're
also
developing
capabilities
that
really
help
brands
to
engage
with
their
audience,
yeah,
target
like
the
right
audience
and
help
them
position
to
message
and
their
brand
in
the
right
audience.
And
I
think
we
can
actually
build
on
that,
because
part
of
that
is
also
like
strong
customer
insights,
yeah,
and
really
help
brands
using
those
insights
being
in
product
development,
but
also
in
the
messaging
towards
customers.
So,
I
think
building
on
that,
yes,
I
think
there
are
like
ways
to
support
brands
overall
in
their
digital
strategy.
And
I
think
it
also
gets
more
and
more
holistic
how
we
can
actually
help
them
through
our
capabilities,
yeah,
and
not
only
on
Zalando,
but
also
beyond
that.
Yeah.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
Yeah.
David,
you
stated
in
your
presentation
earlier
today
as
the
pre-recording
on
the
customer
metrics
and
how
they
have
developed
and
what
nice
positive
impact
we
have
seen
is,
there's
a
question
from
Jürgen
from
Kepler
Cheuvreux
asking,
can
you
provide
some
additional
details
where
you
expect
to
see
the
biggest
changes
with
regard
to
our
customer
metrics
in
2022?
D
David Schröder
Chief Financial Officer, Zalando SE
Sure.
So
I
think
if
we
look
back
at
the
past
24
months
that
have
driven
some
exceptional
developments
for
the
business
overall,
but
also
for
our
key
customer
metrics,
I
think
from
me,
the
two
that
stand
out,
in
particular,
are
the
one
around
our
active
customer
growth
and
particularly
the
acceleration
in
new
customer
growth
that
I've
also
focused
on
in
my
performance
deep
dive
today.
And
the
second
key
thing
to
highlight
would
probably
be
the
basket
size
development,
which
obviously
benefited
significantly
from
the
lower
return
rate
that
we've
already
talked
about
today.
And
so
these
are
probably
also
the
two
key
metrics,
where
I
would
expect
a
normalization.
So
in
the
active
customers,
we
would
expect
our
new
customer
growth
to
return
to,
let's
say,
pre-pandemic
levels.
And
on
the
basket
size,
we
would
expect
to
see
the
normalization
of
the
return
rate
lead
to
a
decrease
in
the
basket
size
for
this
year.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
Thanks.
The
last
question, David
is
going
to
[indiscernible]
(01:29:19)
on
competitive
on
pricing.
Adam
from
Deutsche
Bank
is
asking,
Zalando
was
more
competitive
on
pricing
in
the
second
half
of
2021,
but
now
– but
looks
to
set
to
increase
prices
in
2022.
Does
this
suggest
you
will
be
a
price
taker
rather
than
a
price
setter?
Any
color
you
may
give
here
would
be
helpful?
D
David Schneider
Co-Chief Executive Officer, Zalando SE
Maybe
to
answer
it
first
from
a
strategic
angle.
For
us,
price
is
not
our
main
differentiator.
And so,
it's
not
our
goal
to
lead
on
price.
For
us,
it's
a
lot
more
important
to
reinvest
into
experience
and
engage
with
customers
through
that
experience
and
through
a
great
assortment
access
providing
like
anything
that
is
relevant
for
customers
telling,
like
all
the
great
like brand
stories
and
engage
with
like
content,
it's
about
creating
like
experiences
on
our
propositions,
be
it
like
for
fashion
or
for
beauty
or
for
designer
or
for
pre-owned. Yeah,
so
that's
important. And
then,
also
convincing
through
a great
convenience
experience,
then
linking
everything
through
like
our
Plus,
so
I
could
be
talking
about
that
for
a
while,
but
I
think
those
components
are
for
us
far
more
important
and
in future
we
are
thinking
further
around
like
how
to
engage
with
customers
in
even
better
way
and
then
also
entertain
them
more.
Concretely,
to
like
price
developments,
and
yes
we
do
see
price
increases
in
the
market
and
we're
like
also
in
close
discussions
with
our
brand
partners.
So,
it
looks
like
we
have
price
increases
in
like
mid
to
high-single
digit
area,
which
I
think
we
have
like
over
the
past
decade,
we
haven't
experienced
such
a
shift
in
pricing.
So,
that
is
something
I
think,
that
we
will
see
and
where
we
also
see
like
prices
adapting
and
where
we are
also
closely
monitor
like
what
is
like
the
customer
reaction,
how
do
they
also
shift
like
in
different
price
buckets.
But
I
think
also
across
like
our
platform
as
we
have
a
very
broad
assortment
and
work
with
almost
6,000
partners.
I
think
we
also
have
to
leeway
to
also
adapt
to
that
and
offer
what
is
most
relevant
for
customers.
P
Patrick Kofler
Head-Investor Relations, Zalando SE
Thanks.
Yeah,
that
concludes
today's
Q&A
session
with
the
both
Davids
here
on
stage
and
Robert
virtually.
Thanks
everyone
for
attending
today's
full
year
publication.
As
always, we
will
be
on
the
road
to
discuss
our
results
in
the
next
couple
of
days. We
will
also
host
an
analyst
roundtable
in
the
week,
and
if
there
are
any
remaining
questions
do
not
hesitate
to
contact
us.
In the
meantime,
stay
well
and
yeah,
get
well
through
these
times
and
hope
to
see
you
soon.
Thanks,
everyone.
Bye-bye.
Good morning, and a warm welcome to Zalando's Full Year publication of our Results 2021. My name is Patrick Kofler and I'm heading the IR office here at Zalando. I will be your host today. Thank you for joining us remotely. It's great to have you here, even if only virtually.
I am often asked why we have a co-CEO structure. Here's one of the reasons. As Robert, our co-CEO, is quarantined after being exposed, the other co-CEO, David can step in easily. Therefore, we'll kick off our full year publication with our co-CEOs David Schneider and COO David Schröder. They will give you an update of our growth ambitions and our plan for next year.
After that, we have a dedicated performance deep dive on our recent results presented by our COO, David Schröder. For the Q&A session, we'll be back here live together with both Davids on stage and Robert virtually as well. A couple of housekeeping rules before we actually kick this off. To ensure the health and safety of our team, the presentation has been pre-recorded. All the participants on site have tested negative to the coronavirus. We also observe the necessary hygiene rules. If you want to ask a question, please click the button, Ask a Question on the right side of your screen. When you click on it, you can easily type in your question. The question section is open in the next few seconds.
And with this, David, the floor is yours.
Welcome and thank you for watching. Today, it is David and myself who will lead you through the 2021 results, but I can speak for all of us that 2021 was an outstanding year and we have a lot of exciting initiatives coming up and we will talk about what to expect in 2022.
So, yes, 2021 was a truly remarkable year and an important step on our journey to be the starting point for fashion. So we expanded our footprint to 23 markets. Last year alone we launched six new markets in Eastern Europe. In 2021, we reached more than 48 million active customers. That is 25% increase from 2020 and that also means we expanded our customer base with 10 million new customers which is great, but an even more important part of our strategy is to deepen customer relationship and create loyalty and it is also something we really see paying off.
To give you an example, 60% of our overall GMV now comes from active customers who have spent more than €500 a year with us. Our customers now buy on average five times a year. This strong tractions in customer loyalty has translated into a strong financial performance. We delivered stellar growth momentum and an acceleration compared to 2020.
Our group GMV grew to €14.3 billion, that's got quite an outstanding 34% growth year-on-year and maybe let's also put this in absolute numbers. We added €3.7 billion in GMV in one year and as we have also strong momentum in our Partner Program, revenues didn't grow as much as the GMV. But I'm also proud that we exceeded €10 billion in net revenues, which I think is quite an amazing milestones and like the 13th year after founding Zalando. Thanks to that strong momentum, we were able to deliver a healthy level of profitability with more than €468 million in adjusted EBIT which is a margin of 4.5% of revenues.
Yeah. That was a great result and there was a lot of hard work behind these results. So, I also want to take the opportunity to deeply thank all our employees for the great collaboration for the focus and for all the commitment everybody put in. For us, being the starting point for fashion means we want Zalando to be the destination where everyone gravitates to for all their fashion needs and wants. You don't need to go anywhere else for fashion, because we have it all in fashion, lifestyle and beauty. All we can find, it's in for you, be it in our warehouse network, in our partners e-com warehouses or even in stores. And through us, you can get it in the most convenient way. And there's no way to get it faster, easier or better. And on top, the digital experience is great. It's tailored and personalized to you. So if you're looking for something, we offer the easiest place to find it. If you want to be inspired and entertained, Zalando is the best place for that too. We're not there yet in all these dimensions, but I think our progress is amazing.
Yeah. And every day our team is working hard to live up to these promises for our customers. To achieve our starting point ambition, we are focused on three strategic pillars and have set ourselves ambitious goals for 2025. So first, we aim to create deep customer relationships at scale to play an important part in our customers' lives. Second, we transition towards a true platform business, or, let's rather say a true fashion platform, bringing together customers and partners in a way that really creates unique experiences and strong benefits for all. And third, we use our scale to become more sustainable and drive positive impact for our people and the planet. And this is not only the right thing to do, but also strongly in line with long-term interests of our customers and partners. The strong progress on all these dimensions last year, puts us in a very good position to reach our 2025 goals, which are over €30 billion GMV, our partner business share of more than 50% and to grow in a more sustainable way, working towards our net positive target.
Let me maybe begin with our first strategic dimensions to create deep customer relationships at scale. In our journey, we learn that just selling different categories to our customers is not ideal. Customers' needs and wants are so different that ultimately we cannot just add new categories of merchandise. Instead, we build distinct customer propositions. If you're interested in the latest beauty trends or if you prepare for an outdoor adventure, you want to have an experience that really caters to your needs in that moment. And to us, a proposition means a tailored experience and a commitment. So only when you commit to deeply understanding the needs and wants of customers, be it in fashion or in beauty or in sports or in pre-owned, then you can drive innovation in the experience and earn deep customer relationships. Our core proposition is fashion. That's where we started and that's the biggest propositions we are known for and loved for by our customers.
About 90% of our active customers buy fashion with us. And if you look at the past few years, there's been a huge development. We have an ever-growing selection and access to the most relevant plans and stories. We drive innovation and understanding customer styles and sizes to really make the right recommendations. We add inspiration and entertainment, which I think becomes more relevant in future and one of the highest priorities we have to work on, because really no single platform has figured out how to combine a transactional e-com experience with the content-driven inspirational experience. There's either the content experiences that are not great in enabling a customer to buy something or there is an e-com experience, where customers are not really inspired or entertained. And that's probably the biggest frontier in fashion commerce. And we're very committed to make bigger steps in this journey throughout the year.
Let's take a look.
[Video Presentation] (00:08:54-00:10:49)
But let's also have a look at our other propositions. Last year, we talked a lot about beauty and how we want to win in the beauty space. That it requires a proposition and in-depth innovation of the experience. Yeah, we've made great progress here. Beauty grow over a 100% year-on-year. We increased our selection to over 25,000 products from 400 brands, added great beauty houses like Estée Lauder, L'Oréal or Coty, and of course, also through our partnership with Sephora. We're on a strong path with beauty and are happy with how customer or customer base has adopted our beauty proposition. But for us, it's not only about beauty itself, we have developed a repeatable playbook, a playbook of how we can broaden our customer proposition offerings. Then dive deep in the innovation of the experience and help our customers to cross connect across all these propositions.
In this playbook, we can use to build our further propositions, yeah, and open more doors for customers to connect. And talk about connecting, connecting this proposition is a critical part of our strategy to achieve deeper relationships. Well, we want to dive deep in the innovation of each propositions. Ultimately, we want to make sure that one plus one is more than two. There's a lot of value for customers to engage in all our propositions in order to get the most out of Zalando. And Zalando Plus, our membership program is our ultimate tool as a [ph] meta (00:12:32) proposition that unlocks value. Plus, for an annual fee, you get the best out of Zalando, even faster shipments and early access to exclusive product lines. And we just passed the mark of more than 1 million members, that's an amazing milestones three years after we launched Plus. And there is now more to come with Plus. While the first million members took us three years, the second million we forecast to achieve in this year.
In 2022, we will double down in making Zalando Plus the loyalty program in fashion. After expanding the program to the Netherlands, France and Italy in 2021, we will double the number of new markets by the end of 2023. We'll add more benefits and improve existing ones in the area of convenience and assortment. For example, we will give Zalando Plus members early access to sales events. So, Plus is the ultimate sign of deep relationships for our customers. Yeah. A plus member visits Zalando twice as often and spends three times more than a non-Plus customer.
We just talked a lot about how we aim to create these great experiences, be it for fashion or for beauty or for designer, customers want more choice. They seek inspiration. And they want to be entertained. And our partner brands deliver a great deal of this. They add to a limitless choice to a strong brand stories and even, all the hot drops people used to line-up for in the streets. Building our customer experiences also means building a destination where brands want to be. Only if our partners see a big value add of Zalando for their own strategy, they will invest with all these assets.
There are two main components that create strong value for partners. Number one is a multi-brand environment for millions of customers. And number two capabilities for e-commerce at scale. We'll explain how we invest into these areas in a way that no individual brand could. And how this actually creates strong win win win situation for customers, partners and Zalando.
So, let's start with the multi-brand environment. So why do we mention multi-brand so often, because that is how customers shop fashion. Zalando customers shop on average 18 different brands throughout their order history. And even within one order, 50% shop more than one brand. As a fashion inspiration starts in the vast majority of all customers journeys without a concrete product or brand in mind, and being the starting point means that customers come to us before they decide what they buy. And this concept is very important for our partners, because they know they can only cover like a smaller fraction of the inspiration part themselves and they need to be where the customers really engage. So, we will build the place where they can engage with the relevant audience.
And I think our growing brand portfolio is a good indicator of how relevant we are for brands, launching brands like Sephora or Apple watches show how we create stories that elevate brand equity and customer engagement. We have scaled our assortment with driving really like a flawless choice across 5,800 brands, meaning we were able to increase the assortment of our most relevant brands by over 75%. And it's not only about a wide assortment, it's also about showcasing the brand's DNA and presenting the best range of products.
And that's why we have introduced Dedicated Brand Homes. These allow our customers to follow the brands they love. In turn, brands can engage with customers in a meaningful way and build deeper relationships and deep learnings for themselves. Already, 14 million Zalando customers have become brand fans over the past years. And last but not least our shared values across topics like inclusivity or talking about genderless or sustainability unlock impactful collaborations. As all of these topics are very much top of mind for our customers and together with our partners we aim to drive further engagement across these trends.
Investments and innovation in these areas in a multi-brand environment creates a strong value add for brands as it helps them to connect to their target audience, and it helps them in their own strategy. The more brands invest into the Zalando experience, the better our customer propositions get. The second big value add for our partners our capabilities that enable digital business. So we solve three major challenges for them. First, they have to be online where the customer is, and we able them to go direct-to-consumer in the multi-brand environment. Our Partner Program and Connected Retail are our way to put them out there.
And you also see that the strong brands place more and more bets on direct-to-consumer. And I think it's a very strong signal that they consider not only like their own website as direct-to-consumer, but also selling through our platform. And by now, 30% of our GMV comes from this model.
As a second step, partners can leverage our infrastructure to reach customers in all of our markets. Zalando Fulfillment Solutions is a great lever for brands to boost their reach without having to invest in their own infrastructure. We strive for 75% of Partner Program items shipped by ZFS by 2025. And today, we're already at 55%, so we're on a very good track.
And then, thirdly, we enable partners to speak to their audience and leverage our data and reach to drive their sales; and not only sales but also to position their brand. Our long-term target is that 3% to 4% of our GMV comes from the Zalando Marketing Services. And we reached 2% in the fourth quarter of 2021, which I think is already like a good proof point that more and more partners are adopting our marketing services.
Let's dive one level deeper into our logistics capabilities, as these are clearly needed for any direct-to-consumer approach. And we have built a highly relevant network. So our Partner Program business is a strong indicator of how brands engage with a direct-to-consumer possibilities. Our partner business grew at an impressive rate of over 75%. That's more than 3 times faster than our retail business. Then Zalando Fulfillment Solutions at the same time grew even stronger. The item volume sold by partners but shipped by Zalando more than doubled year-over-year.
And one of the reasons for partners to utilize ZFS is the immediate international footprint. We offer all of euros in a box to partners, which most cannot cover with their own footprint or with like a logistics provider. This is reflected in the strong growth rate of our Partner Programs in markets other than Germany. For example, in Switzerland we went up 10 percentage points yet to partner business share of 25%. In Belgium, we reached 33% or in Spain, we more than doubled its share to 19%. And I think Spain is also a good example of how Connected Retail adds a lot of value to local customers. Connected Retail means connecting inventory of local brick and mortar stores and shipping it directly from the stores to customers. We have now more than 7,000 stores connected in our network.
If we're successful enabling partner business success on Zalando, yeah, and on the Zalando platform, we can also enable our partners to leverage our logistic backbone to drive the success of their direct-to-consumer business across all channels. So, we will start by opening up Zalando Fulfillment Solutions with channels beyond Zalando. And therefore, we enable multichannel fulfillment for our partners.
And by doing this we will offer brands and retailers the opportunity to outsource e-commerce logistics to Zalando. Some of our partners have actively asked for assets to fulfill beyond our platform because they face challenges in their own approach. For example, if they serve Zalando customers and then at the same time their own e-com and several other channels that usually leads to splitting up inventories and that again leads to bad order economics. I can tell you partners don't like fragmented inventory.
And another reason shipping cross border and integrating like the right providers is quite complex, and usually many brands and providers cannot ship to like all the markets we're talking about. Then, at the same time, customers' expectations around convenience are getting higher and higher. And then also investment, what's becoming more sustainable and then your own operations are needed and in demand by customers. We have built a large and flexible networks that will tackle all of these challenges. We can offer partners flexible expansion to reach all markets and tap into our constantly improving convenience offer.
And then also we're consolidating orders – we improve order economics and we also reduce the carbon footprint, which is a nice segue to the third element of our strategy. And we aim to build a sustainable platform to win the hearts and minds of our customers. Our ambition is to be a net positive company in the long run, and that means that we give back more to society and the environment than we take. And that's a high ambition.
To achieve it, we have to work on solutions together with our partners and invest in innovative technologies. Only then we can really unlock opportunities that will help both Zalando and the industry to evolve. And we believe that with our platform, we are in the right position to do so because we can engage with more than 5,800 brands and on the other hand, 48 million customers. And we drive our efforts forward in three areas: our planet, products, and people. And we're very confident in our efforts and believe we're on the right path. Nevertheless, there are significant challenges to solve and solutions to scale.
Let's dive into two examples. So my first example is our more sustainable assortment. Our commitment is to generate 25% of our GMV with more sustainable products by 2023. And I think we've made quite some good progress so far. We're proud to offer our customers what we believe is the biggest sustainable assortment in Europe with now more than 140,000 products, and that compares to around 80,000 last year. Maybe also to put it a bit in perspective, our sustainability assortment is now as large as our entire assortment in our IPO year.
And the sale of these products accounted for 21.6% of our gross merchandise volume overall which is already getting close to our 25% target. And also from customers we get very good feedback. We see strong interest in these products. For example, if we look at conversion rates or on more sustainable products versus similar standard products. And in order for this progress to be meaningful, we need to overcome three key challenges.
The first is the lack of a common definition for sustainability for fashion products. And the second challenge is tracing all this information across the value chain, starting from the field to the product. Then, the third challenge is around customers understanding of these standards. We know from our research that they find sustainability to be quite complex. It's complex to understand. It is also complex to act on it. And that's why we have a team fully dedicated on building a better digital experience that allows customers to engage with sustainability in a better way.
My second example is more sustainable packaging. When it comes to packaging, of course, our first priority is to ensure the products reach our customers safely and undamaged. But at the same time, we aim to reduce our packaging volumes to a minimum and specifically eliminate single-use plastic. To do this, we focus on two key elements in our packaging design. And number one, 89% of our packaging materials contains recycled input. And then, 99% is recyclable so that our customers can dispose of the packaging responsibly.
Our main achievement last year was to switch to paper shipping bags across Zalando, which we'll actually complete in the next few months. But one long-term challenge in the industry remains, polybags. This is a massive challenge, and industry is – basically every single product is wrapped in a polybag. So what we'll do is, together with our partners, we're testing new materials and reusable options to tackle this. But we have also have to be honest that there is a long way to go. So this would be one of our key focus areas going forward.
That was just a snapshot of all our efforts we're driving. I have to say that it's very motivating to see how passionate all teams are working on ideas and how to – how deeply ingrained sustainability already is in all of our projects. And we have talked a lot about growth, but it's important for us to not grow just for the sake of growing. And we want to leverage all of our customer reach, our capabilities and our relationships in the industry to enable and then drive some structural changes.
With that, I would like to hand over to David, who can give you an overview of how the sustainable growth looks like in numbers.
Over the past 24 months, we've experienced an exceptional operational and financial performance acceleration. As a result of this acceleration, which was particularly pronounced in the first half of 2021 with GMV growth reaching 46% year-over-year, we are well on track to reach our mid-term growth ambition. As European consumers and economies are gradually returning back to a new normal, we've seen our growth rates starting to normalize since summer 2021. That said, we are confidently looking ahead towards our 2025 GMV target of more than €30 billion, as we continue to grow from a significantly higher base.
The opportunity ahead of us remains immense. We are operating in a large market that is projected to grow to €450 billion over the next few years. And although we have achieved a lot over the past decade Zalando's market, share is still only at around 3%. The COVID-19 pandemic has accelerated change in the fashion industry that has long been in progress and has blurred the boundaries between offline and online as consumers and brands are increasingly going digital. And our strong platform strategy perfectly positions us to take advantage of this opportunity making us confident that we can serve more than 10% of the total fashion market in the long term.
To capture this opportunity, our number one priority remains to deliver continued strong growth. Hence, we continue to invest through the cycle to create long-term value for customers, partners and shareholders. For 2022, we do expect a more volatile market environment driven by three key factors, weakening consumer sentiment, continued supply chain disruptions, and rising inflation concerns. While we will not be able to fully isolate ourselves from these temporary market developments, we are confident that just like in the past our strong platform business model, our agile business steering approach, and our continued efficiency improvements will allow us to successfully navigate through this volatile market environment and to continue to grow faster than the European online fashion segment.
Looking ahead at 2022, we does expect to grow GMV by 16% to 23% and to add €2 billion to €3 billion additional GMV. On a two-year CAGR for the years 2021 and 2022, our GMV outlook implies a growth range of 25% to 28%, ahead of our mid-term target growth corridor of 20% to 25%. In line with our platform transition and increasing share of the Partner Program, we expect revenue growth to trail GMV growth, resulting in revenue growth of 12% to 19%. Similar to last year this growth will not be evenly distributed across quarters. Due to baseline effects we expect lower-than-usual year-over-year growth for the first half and a re-acceleration in the second half.
Looking at profitability, we expect an adjusted EBIT of €430 million to €510 million, implying a margin of 3.7% to 4.1%, which is well in line with our mid-term guidance. To fund our continued investments into our logistics infrastructure and our technology platform and thereby enable our 2025 growth ambition, we plan capital expenditure of €400 million to €500 million.
And now back to you, David, for some final remarks.
Yeah. We have a very strong team in place to advance our strategic agenda to scale the business and of course, to continue to deliver results. Robert and I are very happy that Sandra has joined our management board today as CFO, and David will assume a newly created role as Chief Operating Officer, focusing on building and scaling unique capabilities and enabling the company's growth. Jim transitioned last year from CTO into newly Credit Chief Business and Product Officer role, yeah, developing, marketing and growing our consumer offerings. And Astrid joined us last April as Chief People Officer.
We are all excited about the strong progress we have made in 2021 and further strengthening our position as the starting point for fashion. In 2021 the company grew significantly faster than expected and putting us on track to achieve our mid-term growth ambition and reach more than €30 billion GMV by 2025. And Zalando continues to focus on strategic initiatives that will drive future growth. We're laser-focused on execution and in a strong position to continue to deliver long-term growth.
Yeah, thanks to the whole team for this outstanding achievement. And yeah, now let's hear what David has to say and jump to our performance deep dive.
Welcome to our performance deep dive session. Today's keynote highlighted a strong progress we are making towards our vision to be the starting point for fashion. Providing further insights into our key strategic priorities and initiatives for 2022 and reiterating our 2025 ambition. Building on that, I will now provide you with more details regarding the development of key strategic, operational and financial performance indicators for Q4 and full year 2021; as well as additional information regarding our outlook for 2022.
Starting with our strategic priorities to grow our active customer base and to further deepen our customer relationships, we see great progress when looking at key metrics. During 2021, we were able to grow our active customer base to 48.5 million customers, supported by strong new customer acquisition throughout the year. We also saw a continued decrease in new customer churn, with churn reaching an all-time low over the course of 2021. Customer order frequency reached a new all-time high of 5.2 orders per active customer over the past 12 months. Average basket size showed a slight year-over-year decrease of 1.3%, mainly driven by a lower average item value compared to the prior year. As a result of increasing order frequency and broadly stable basket size, GMV per active customer grew by more than 7.1% over the last 12 months to now almost €300, representing the strongest year-on-year increase since 2017.
While we are very happy with the progress achieved in 2021, we expect our customer metrics to normalize over the coming quarters as the return to normal continues. When looking at customer development over a longer time horizon, we see consistently positive trends and the evolution of our customer cohorts. These trends are well reflected in this cohort chart, which we update and share with you on an annual basis. It shows the total GMV per cohort and order year. The light gray bar at the bottom shows the GMV from cohorts we had acquired before 2016. Staggered on top of that, you see the GMV contribution of cohorts we acquired in the years thereafter.
During 2021, we saw more than 10 million new customers join our platform to shop fashion, beauty and lifestyle products. The 2021 cohort delivered almost 25% more GMV in the first year than the cohort acquired in 2020. But it is not only the newly acquired customers that contribute to Zalando's growth. When we look at the development of older cohorts, we see consistent growth and an increase of annual GMV contribution for each cohort from the second year onwards following some initial churn in the first year. It might be interesting to note that in 2021, Zalando's GMV would have grown at a double-digit rate, even if we had not acquired a single new customer.
Let me now provide a bit more context regarding the exceptionally large customer cohorts acquired during 2020 and 2021. This period has been strongly influenced by the evolution of the global pandemic and resulting governmental restrictions and changes in customer behavior, causing an acceleration in the structural consumer demand shift from offline to online. As a consequence, more consumers than ever before have shifted to Zalando for their fashion and lifestyle needs. Our new customer growth accelerated significantly from 2019 to 2020 and remained at an elevated level in 2021. When looking at the quality of these customer cohorts in more detail, we see that they show very similar or even slightly better characteristics compared to previously acquired cohorts, as indicated by their engagement, their reorder behavior and their spend with us. This observation also holds true beyond the peak periods of the pandemic, as proven by the continued strong developments in the second half of 2021, when European consumers and economies saw a gradual return to normal.
Let's now turn to our second strategic priority, enabling our partners' direct-to-consumer business, which is at the core of our platform transition. In 2021, we recorded exceptional growth across our entire portfolio of partner-facing platform services. Our partner business, consisting of the Partner Program and Connected Retail, which aims to connect our partners directly with European consumers, has grown by more than 75% in 2021, resulting in a partner GMV share of 30% in Q4. Zalando Fulfillment Solutions which allow our partners to leverage our European logistics network to increase their customer reach and satisfaction, while at the same time reducing complexity and cost, have grown even faster than our core offering over the course of the last year. The number of items shipped via ZFS increased by more than 100% year-over-year, representing a 55% share of all Partner Program items shipped in Q4. Last but not least, Zalando Marketing Services, which enable our partners to increase their visibility of the offering and to build their brand on Zalando, also recorded very strong growth of more than 90% in 2021. ZMS revenues reached 2% of Fashion Store GMV in Q4, putting us well on track to achieve our long-term ambition of 3% to 4% of GMV.
Our third strategic dimension is focused on people and planet, and on delivering the ambitious goals we set out in our do.MORE sustainability, as well as our do.BETTER diversity and inclusion strategies. As a part of our Zalando principle [indiscernible] (00:39:04) transparency, we report annually on the progress made in both areas. While you will find a great level of detail in the relevant sustainability and D&I progress reports available on our website, I would hereby like to highlight that we made continuous and strong progress towards reaching our sustainability goals, which is also being recognized externally.
As a part of our do.MORE strategy and next to drastically reducing our own emissions, we aim for our partners accounting for 90% of supply related emissions to set science-based emission reduction targets by 2025. By the end of 2021, we are pleased to say that partners accounting for around 51% of supply-related emissions had [audio gap] (00:39:48) compared to 34% in 2020. The second example shown here concerns our sustainable packaging targets. With our switch from plastic to paper shipping bags, we reduced the use of plastic shipping bags to 37% at the end of 2021 and aim for 0% by 2023. Thirdly, we expanded our portfolio of more sustainable products to more than 140,000 products, compared with around 80,000 a year earlier. The sale of these products accounted for almost 22% of our GMV. These are just three examples, but they clearly demonstrate that we are making quantifiable progress and leveraging our position to drive positive change in the industry. This concludes our wrap up on the strategic progress we made over the course of the year.
Let's now turn to our financials, starting with top-line performance. We are pleased to report that 2021 saw exceptional top-line performance with GMV growth of 34.1% and revenue growth of 29.7%, with full year revenues surpassing the €10 billion mark. Both GMV growth and revenue growth are in the upper half of our financial guidance for 2021. For the fourth quarter, GMV growth reached 24.1% year-over-year, with revenue growing 20.5% year-over-year, well in line with our mid-term target growth corridor of 20% to 25% and representing a two-year CAGR of more than 30%. Looking at both full-year 2021 and Q4 developments, partner GMV growth again exceeded overall GMV growth significantly. This also explains, to a large degree, the gap between GMV and revenue growth.
Let's now take a brief look at the developments of each of our three segments. In 2021 Fashion Store GMV grew by 32.6%. Within Fashion Store, the growth rates for the DACH-region and the Rest of Europe region were on a similar high level in 2021, driven by a significant growth acceleration in the DACH-region by 8 percentage points to 33.3% GMV growth, whereas Rest of Europe GMV growth remained strong and fairly stable at 31.9%.
Our Offprice segment continued on its strong growth trajectory, recording around 50% GMV growth for Q4, as well as full-year 2021, which is remarkable, particularly in light of an increasingly challenging supply situation. The other business segment followed the positive trend, driven by a strong performance from Zalando Marketing Services, which benefited from continued high demand of our brand partners for our advertising products, resulting in revenue growth of around 95% for 2021. In the fourth quarter alone, ZMS grew 53% year-over-year. Besides using ZMS to drive sales on the platform by increasing visibility for certain products, our partners also increased their investments in branding campaigns to build their brand equity on Zalando.
Let me conclude the discussion of top-line growth by looking at our multi-year growth performance since the beginning of the pandemic. It is very notable that our two-year GMV CAGR exceeded our mid-term GMV growth ambition of 20% to 25% CAGR in every single quarter since Q2 2020 and exceeded 30% for three consecutive quarters from Q4 2020 to Q2 2021, before starting to normalize again, which we expect to continue in 2022.
Let's now turn to profitability. We recorded an adjusted EBIT of €468 million in 2021, representing a 4.5% margin on the back of strong top-line momentum and a continued, yet temporary return rate benefit. Q4 profitability came in slightly above pre-pandemic levels, yet remained below last year's level. When looking at the regional profit distribution in our core Fashion Store segment, we can see that our more mature markets in the DACH-region delivered strong, absolute as well as relative profitability for the full-year 2021, also supported by a higher partner business share. The fully adjusted EBIT margin of 8.7% for DACH Fashion Store is in line with 2020.
Rest of Europe profitability came in slightly negative and decreased year-over-year, driven by continued and deliberate over proportional investments into customer acquisition and customer experience to drive growth and market share gains in Rest of Europe, particularly also in the six new markets in Central and Eastern Europe, which we launched and ramp up over the course of 2021. Offprice saw a more normalized adjusted EBIT margin of 7.2% for the full year, compared to 9% in 2020. However, the segment delivered a strong Q4 performance, increasing the adjusted EBIT margin slightly to 13.1%. Our other business turned breakeven for the first time over an entire business year.
Let me now give you more detail on our cost line developments that drove profitability in 2021. For 2021 overall, gross margin decreased by 0.7 percentage points compared to last year's level, mainly as a result of increased discounts to offer our customers' competitive prices in a highly promotional market environment, particularly in the second half of the year, as well as continued business mix changes in terms of category mix and country mix.
Our fulfillment cost ratio improved for the full year compared to 2020, as a result of a higher level of utilization and efficiency across our European logistics network, and improved order economics benefiting from a lower return rate. The year-over-year deterioration in the fourth quarter fulfillment cost ratio is due to deliberate investments into our convenience proposition to further deepen customer relationships and to drive customer lifetime value. As for example, by extending our long distance shipping offer, expanding and scaling our premium service offering for Zalando Plus, by our ongoing efforts to offer more sustainable packaging.
In 2021, our marketing cost ratio increased year-over-year as we remained focused on customer acquisition and engagement investments, supported by our [ph] AI (00:46:19) based marketing approach and ran major launch campaigns across our six new markets. In the fourth quarter of the year, we reduced our marketing costs in absolute and in relative terms compared to prior year, mainly due to lower brand marketing investments.
Last but not least, our admin costs continued the positive trend observed throughout the year, driven by increasing economies of scale and continuous efficiency improvements. As a result, our adjusted EBIT margin decreased by 0.8 percentage points year-over-year to 4.5% in 2021. Excluding the temporary positive impact from lower return rates, the pro forma 2021 margin would have been 3.4% in 2021, compared to 3.8% in 2020. Since we continue to expect a normalization of return rates over time and given the significant impact of returns on our operating margins, we believe this pro forma measure provides you with a better view of our underlying profitability development.
Turning to cash-related items, we recorded a sizable decrease in our net working capital position year-over-year. The main driver behind this development is a relatively stronger increase in trade payables than in inventories and receivables, as a result of the strong growth momentum in our partner business. Reflecting our continued investment into our technology and infrastructure to enable our growth trajectory, capital expenditure significantly increased year-over-year, both for the full year and the fourth quarter. Mainly due to the strong decrease in net working capital and due to our strong operating cash flow, we recorded a positive free cash flow of €283 million for 2021, broadly in line with the previous year despite higher capital expenditure. Our cash balance amounted to around €2.3 billion at the end of Q4.
Let me close this presentation by providing you with more information regarding our 2022 outlook. Over the past 24 months, we have experienced an exceptional operational and financial performance acceleration.
As European consumers and economies are gradually returning back to a new normal, we've seen our growth rates starting to normalize as well. Looking ahead at 2022, we expect to grow GMV by 16% to 23% and to add €2 billion to €3 billion additional GMV. On a two-year CAGR for the years 2021 and 2022, our GMV outlook implies a growth range of 25% to 28%, ahead of our mid-term target growth corridor of 20% to 25%.
In line with our platform transition strategy and increasing share of the Partner Program, we expect revenue growth to trail GMV growth, resulting in revenue growth of 12% to 19%. Similar to last year, this growth will not be evenly distributed across quarters. As we are lapping exceptionally strong performance of 46% GMV growth in the first half of 2021, we expect lower than usual year-over-year growth for Q1 and Q2. With easing baseline effects in the final six months of the year, we expect our growth to reaccelerate significantly, implying a comparatively stable two-year CAGR for the entire year.
Looking at profitability, we expect an adjusted EBIT of €430 million to €510 million, implying a margin of 3.7% to 4.1%, which is well in line with our midterm guidance issued last year at our Capital Markets Day to start 2022 in the lower half of our 3% to 6% corridor. Compared to 2021, this implies a slight margin decrease as the prior year benefited significantly from temporarily lower return rates, which we continue to expect to normalize over time. For cash related items, we expect negative net working capital and capital expenditure of €400 million to €500 million to fund our continued investments into our logistics infrastructure and our technology platform, which are among the key enablers of our 2025 growth ambition.
Next to the continued execution of our strategy and our through-cycle investments to drive long-term value creation, our 2022 guidance also reflects our exceptionally strong growth in 2021, as well as a more volatile market environment, driven by three key factors: first, weakening consumer sentiment linked to the economic outlook and current geopolitical tensions, as well as a wait-and-see approach as the pandemic continues to evolve; second, continued supply chain disruptions causing supply shortages in certain areas, particularly in sneakers, footwear and sports; and third, rising inflation concerns, which might have a further dampening effect on consumer demand in general and discretionary spending in particular. While these same factors have been affecting our performance year-to-date, uncertainty remains with regards to the duration and magnitude of the impact these temporary market developments will have on our business throughout the rest of the year. To reflect this higher than usual degree of uncertainty, we've chosen to broaden our guidance ranges for 2022.
In addition, this slide provides you with more transparency on potential performance scenarios and how the different macroeconomic factors might result in us moving towards the low or the high end of our guidance. While we will not be able to fully isolate ourselves from these temporary market developments, we are confident that just like in the past, our platform business model will prove to be resilient and will enable us to respond to these short-term challenges. Our strong brand relationships will help us to secure access to stock, while our platform model will allow us to dynamically adjust our offer, our stock levels and our logistics capacities to various demand scenarios.
Furthermore, we will rely on an agile business steering approach, as well as continued efficiency improvements to deliver strong performance and to continue to outgrow the European online fashion segment.
Let me close this presentation by reiterating that we are truly excited about the immense growth opportunity ahead of us. We remain laser focused on our long-term vision to be the starting point for fashion and on our 2025 ambition to build a sustainable platform business with more than €30 billion in GMV, maximizing long-term value for our customers, our partners and our shareholders.
That concludes our deep-dive session. Let's now jump into Q&A.
Good morning and welcome to our Q&A session today. With me are our Co-CEO, David Schneider; and our COO, David Schröder, virtually also our Co-CEOs, Robert is there. Before we begin, David would like to deep dive and to share a few words with you.
Yeah. Usually, the publication of the annual report and our end of year financials is a special moment for us. However, this year, honestly, it's a bit hard for us to stand here as if it's business as usual, as we watched the war in Ukraine unfold. Our hearts and minds are with the Ukrainian people and of course, all our employees, their families and friends who are directly or indirectly affected. Our priority is to help them as much as we can. We're supporting our impacted employees and their families with counseling, visas and travel support, but we're also committed to helping out those impacted however we can through financial and in-kind donations, volunteering, and support for refugees. We truly hope that the path to peace can be found quickly.
Thanks, David. Under these circumstances, it's indeed difficult to think about [ph] much else (00:54:50) at the moment. However, there are things we cannot postpone, such as the financial reporting, and we want to give you the opportunity to share questions with us. Directly linked to that, David, can you comment on the impact you are seeing from that situation, David just described on our business directly as well as indirectly?
Sure, I can. I mean, first of all, it's important to understand that there's no direct impact since we don't have operations there. We have a private label supplier working with a local factory in the western Ukraine. But otherwise, there's no Zalando business footprint over there and therefore there's also no direct impact on the business. What we've seen, however, unfold over the past couple of days in particular, is a significant indirect impact, especially when it comes to our business in Central and Eastern Europe. We operate in 8 eastern European countries out of the 23 markets we serve overall. In these markets, we have definitely seen that consumer sentiment was affected quite significantly over the past few days, which I think is understandable, because people probably have different things on their mind at the moment than shopping fashion. And that's why, we'll continue to closely monitor the situation and obviously adjust our business steering accordingly.
David, switching a little bit and trying to switch gears a bit towards you, Robert. There has been two years of big acceleration of e-commerce adoption. Do you see another decade of growth for Zalando?
Yeah, yeah. I think certainly, I see another decade of growth for Zalando. So, [ph] it's not like (00:56:48) our mid-term ambition is to achieve more than €30 billion by 2025. So, that's more than double as much as we have done like in 2021. On long-term, we see ourselves in a position to serve more than 10% of the European fashion market, and we're very convinced, working very hard in – on this growth path and yeah, and I think that's where we're going.
And I guess the last three years, they have suddenly accelerated the shift towards online and prepared us well ahead on this path – on this growth path. And as a company, we use these tailwinds very wisely and did a great job in our customer proposition work, market expansion and that's what drove customer loyalty, as we have shared with the Zalando Plus milestone that we've hit. So – yeah, and as David said, like 2022 will certainly or very likely be a year with more volatility than usual [indiscernible] (00:57:45) these technical baseline effects from prior year. Yet, I'm very, very confident that with our great team, the proven platform model, our – and our knowledge of how to agile way to steer our business. We're very well positioned to navigate it well. And our strategy is strong, our team is strong. And yeah, and I'm very convinced on our long term. So, our next step is €20 million, €30 billion by 2025, and that's very much our focus.
Thanks, Robert. And going exactly into that direction, there's a question coming from Charlie Muir-Sands from Exane on deepening customer relationship and what's the causing effect of our Zalando Plus members spending 3 times more? Are they signing up to Plus because they already have the – are our highest spending customer or is there a strong sales uplift after they sign up?
Yeah. I think it's a – that's a great question. It's something that obviously we are very – which is very well researched and understood at Zalando. So, there, what is actually correlation effect, what's the causality effect, I can tell you there's a big causality effect, so which is what makes sense. If you have this customer, if you actually commit to paying like on an annual membership for service, yes, I want to use this more. So, there's the causality effect that actually drives more frequency of visits that drives more frequency of sales. And this is what we see now. And that is why we're always so focused and – on driving our Plus membership program into more success, because of this causality, because the causality that's driving deep relationships.
Well, thanks a lot. Yeah, going away from deepening to more current topics on the GMV guidance we published today, David, could you talk us through the assumption that you get to the higher and lower of the range here?
Sure. So, first of all, let me repeat that we, as Robert said, expect to continue our journey in 2022 and continue to deliver strong growth in terms of GMV that will be between 16% and 23%. And I think that is basically reflecting three things. First of all, it's reflecting a very strong foundation. We have by no more than 48 million active customers, partnerships with more than 5,800 brands. Numbers that have significantly increased over the past two years as consumer demand shifts accelerated towards online and also brands focused even more on digital channels. And I think that sets us up for now, continuing to drive strong performance of the business going forward.
The second thing that we obviously need to consider is the very strong baseline of last year, particularly in the first half. So, for those of you remember, we, for example, reported 56% growth in GMV in Q1 last year. We also reported 46% in GMV growth for the full first half, and that obviously means when we now lap these high baselines in the first half that our growth will be rather lower in the first half and higher in the second half of the year, because in the second half of last year, we saw things normalize and therefore also are up against more normal baselines.
And then, the third fact that I think Robert also mentioned and we discussed quite a bit also in the keynote and the performance deep dive today is that we expect a more volatile market environment, primarily driven by weakening consumer sentiment, by continued supply chain challenges and also by rising inflation concerns. We expect that most of these will be more pronounced in the first half and probably gradually improve or even fade away in the second half, and that is obviously also reflected in the guidance range. And quite frankly, it's also the reason why the guidance range is a bit wider than usual.
And so, the best way to think about the lower end and the higher end, I think this year is to say, if these effects fade away quickly, then we will see our growth rates move more towards the higher end. The longer those effects persist, the more likely it becomes that we'll tend towards the lower end.
Yeah. Thanks for that. And full year picture also, always a recurring question is like, when looking into the current trading, do you have already first comments you can share here that would be highly appreciated.
Yeah, I think coming back to what I just said, I think there are certainly almost the same effects to take into account for Q1 that we just talked about for the full year. So, for Q1 in particular, I think we have a super strong baseline with 55% or 56% GMV growth even last year. That, for sure, will mean lower growth in Q1 this year on a year-over-year basis. At least, on the second effects or more volatile market environments, as I just explained, we also expect those effects to be more pronounced in Q1 and Q2 and therefore also leading to lower growth rates for Q1 and the first half.
And then, last but not least, as we briefly mentioned in the beginning, we've seen some early indirect negative impact from the war in the Ukraine, and that will most likely also have an impact on Q1. What does it mean overall? Overall, I think it means that for Q1, we should expect to see our GMV growth be in line with the two-year CAGR that we project for the full year. So, for the full year, we told you today in our presentation that we aim for a two-year GMV CAGR of between 25% and 28%, which is above our mid-term GMV growth corridor of 20% to 25%. So, still continue to expect very strong growth and we expect to land in the same two-year CAGR range for Q1.
When we then briefly turn to profitability, I think there, you should probably have in mind the typical seasonality for our business outside of maybe corona times, which is that Q1 and Q3 are typically a bit softer, have a breakeven or even slightly negative, whereas Q2 and Q4 are most profitable quarters, because they also have the highest share of full price sales. And then, obviously, there are some additional negative impact to be expected this time due to the short-term developments that I just called out.
On the short-term developments and looking into your eyes, David, is like supply chain inventory shortages. So can you quantify the impact on sales we are seeing for this quarter, or the upcoming quarters perhaps any color you can give here?
Of course, there is an effect which is real due to COVID in the supply chain and also due to transport. Many of our brand partners have also commented on the challenges. So we see them in certain areas, especially when it comes to sneakers, footwear, sportswear where it's most prevalent. So, therefore this season, spring-summer 2022, we do see the effects, although the effects are less than we expected them to be last year. And we also see improvements, and we also expect it to improve throughout the year. We'll have to monitor closely like what happens to fall winter 2022.
But that said, I think also as a platform, we're very well-positioned as we work with, yeah, close to 6,000 brands. And I think we can balance because in our assortment we are broad, we can have the full range. We can work through wholesale, through Partner Program, through Connected Retail in order to create, like, access for customers. And then on top, of course, we're also very close dialogue with our core brands to monitor what's happening and to be able to react, if necessary.
Yeah. Thanks a lot. Moving away from current trading and looking more into the future into our platform strategy, perhaps to you, David. When we're looking to our Partner Program in more detail, can you discuss the drop-through of the 2022 EBIT margins will be slightly up on 2019, despite the Partner Program contribution of more than €1 billion in 2021? Why aren't we seeing that on a gross margin or even in EBIT level yet?
Yeah. Let me take this opportunity to maybe take a broader look at the progress of the platform transition, right. So as David and I mentioned in the presentations today, we see continued strong progress on our way to become a platform business. We see Partner Program and Connected Retail growing by more than 75% year-over-year and ZFS and ZMS are key enabling services growing even faster. And I think that's, obviously, a key proof point that we are moving in the right direction and we also are well on track to reach our 2025 targets that relate to the platform.
I think what is also actually great news for us that for 2021 for the first time, our non-merchandise revenue exceeded €1 billion and I think that is, in a way, the result of the progress we're making with our platform business. I think it's also important to consider though, that it's one out of more than €10 billion by now, right. So it's the business or the P&L, and especially the revenue line is still dominated by our wholesale business model. And I think that's one key explanation why you don't really see the progress of the platform transition as much in the P&L as you will see it in future years, and as we have also talked about it when we think about our long term target margin.
That being said, I think obviously we remain committed, both to our long-term model, where we project 20% to 25% target margin for the partner business, and also to our mid-term margin ambition to move closer to 6% by 2025. And that will be largely driven by our continued progress with the platform. To just maybe talk about one last key item that I wanted to mention, when we look at the profitability development or also profit contribution of our platform business year-over-year, and also as it stands for 2021, there are two key messages. First of all, it is already highly accretive to the group margin. And second of all, the profitability has increased year-over-year, and therefore, we are definitely also on track to reach our long-term margin targets for that part of our business.
Thanks, David. Going more into the Partner Program and there's a question coming from Miriam from Morgan Stanley. What explains the difference in our Partner Program share we are seeing across different markets? Is it simply scale or maturity? And how does this trajectory of our Partner Program in newer markets compare to our home market here in Germany?
I mean, first to note that Zalando, of course, also the Zalando penetration looks different across different markets. So I think there is also like the Zalando maturity in certain markets that play a role. Then our partners now, of course, they also have to develop the capabilities to ship internationally, which is usually a challenge to actually have, like, the right providers and all the connections and place you need, which is also exactly a reason why we offer ZFS.
And then believe very much in our own logistic networks to actually help partners get there because that is actually, this offers like all our European markets to partners quite immediately. We also see a strong traction. And you see also like if you solve these challenges for partners, how it then develops very quickly. I mean, if we look at, for example, Switzerland, how it develops once you overcome like the hurdle for partners and offer them, through ZFS, like, an easy way in. That you also see like the Partner Program share developing very quickly.
And I think in future, so we see markets that will develop fairly quickly on the Partner Program share. We also see a big lever to actually offer really relevant assortment locally. For example, in Spain, we even can utilize like the Connected Retail proposition to which we get access to locally relevant assortment and offer that locally to customers. So I think it's a big lever also for us to be even more relevant in the specific markets.
Yeah. I think that was a good hint. And also somebody already assumed some kind of a question here. We are also providing more logistic services for our brand partners. What kind of additional service can we exactly give to these Connected Retail partners? What is here in our minds and what are we able to share here already? Not sure. David?
Yeah. Happy to jump in here. So obviously, the type of logistics service that enables connected retailers is a bit different from the type of logistics service that we've built for our brands, because those stores essentially are small fulfillment centers. That's the whole beauty of the model, and therefore, they don't require as much help with warehousing as our brand partners do when they use ZFS, but they definitely can benefit from our capability in the area of shipping and returns. And that's why we are, especially for 2022, now we're very much focused in making sure that we can support them with more efficient, more convenient and also more economical returns handling, which we think will make the model much more attractive for many of them, given that the cost to serve can be dramatically reduced.
Thanks. Sticking with logistics also kind of an evergreen here, when we talk about our logistic platform to grow our GMV by €4 billion per year, we also need to add three to four new distribution centers every year. But apparently, some outsiders don't seem that we are on track, on pace here. So perhaps you can comment on, are we getting enough throughput via our existing network?
So, I think our existing network is well set up to support current business volumes and also, obviously, the growth for the year to come. Please don't forget we just at the end of last year took online a completely new facility, the biggest so far close to Rotterdam and the Netherlands, which gives us ample of room for growth. And we are, obviously, continuing our ambitious network buildout program, which aims to add more than seven additional warehouses by 2025. Several projects are underway in France, in Germany and in Poland. All those have been announced last year and we are working on a few more that will be announced soon. So from our perspective, our network build out is well on track and even so well on track that we announced today that we also now feel comfortable to open up our network to support our brand partners also across more channels than just Zalando.
Yeah, exactly. Also another question exactly on that last sentence by David to you, David Schneider. Could you talk a little bit more about the outsourcing of the logistic to brand partners and how this will be chart for, will it be the same way as Zalando Fulfillment Services, (sic) [Zalando Fulfillment Solutions] (01:15:14) so, as a cost plus model? And what is the level of adoption that could be here. So perhaps any thoughts you can share here?
I mean, we've – also like in the past years, we've been in a lot of discussion with our brands. How can we how can we actually open up our capabilities more and more now, yeah. And to close our work together, I mean, we know brands invest into the direct-to-consumer approach. And of course, they ship not only like through Zalando, but also through their own income and other channels.
So what we see is that – by opening our capabilities as we have really the best network for fashion, for fashion logistics, why not open that up and actually help brands to really also go more direct to consumer. Because I think that's how we want to position ourselves with brands to enable their digital business and be part of their really digital strategy and not creating any barriers. And I think there is like very clear wins, I mean, for partners. Again, it gives them access to, like, all our markets all over Europe.
I think, obviously, in combination with, like, having Zalando as a strong channel for them that also creates, like, being able to consolidate parcels. Yeah. I think also a lot of economic benefits that are in there. Yeah. And of course, they can make use of like all these convenience investments in innovation, also from the sustainability angle. All these investments will go, yeah, across Europe across all brands, they can make use of that.
At the same time, I think we also have the benefits, yeah, or our customers have the benefits as we tap into better availability, stronger inventory pools, and again, I think also the strong benefits for partners. We do not have to split inventories in that sense, which makes, of course, a big effect. And you can say that brands do not like to fragment their inventory. Yeah. So, we believe that this strong win win win, yeah. And that's again, our partners win and I think for customers, we have a strong benefit. And I think for us, of course, it's also interesting to build out like really this infrastructure, and which, of course, is also like a great business model to build on for us in future.
Yeah. Thanks for that. There's also financially related, just coming another warehouse question on from Adam from Deutsche Bank. Perhaps, David, you can comment broadly on that like what is the return on capital for spending CapEx on a new distribution center and fulfilling the logistics for partners. Is this is only available if they sell enough product via Zalando and perhaps any thoughts you may share here?
Yeah. Sure. So, obviously, when we evaluate these projects and take decision on such a large CapEx spending, we take a very close look at the business sketch for each of these locations. And although I, obviously, cannot go into a lot of detail here, what I can confirm is that all these projects come with a very attractive and high NPV, and they also come with a super-fast payback, for example, in the automation technology, which is really the bulk of the CapEx investment that we are talking about here which typically pays itself in just three to four years, whereas we can use the facility for much longer, and I think that gives you an indication of, yeah, the return on capital for such projects.
And for sure, as we've mentioned today, this offer will not be limited to partners selling on Zalando. It will also be open for partners to use for other channels. Obviously, we would expect most partners to find it very useful that they can also tap into the large customer base that we can offer at Zalando, but it's not a prerequisite as such.
Cool. Thanks a lot. A little bit related to logistics, but also evergreen here at Zalando is like return rates. Now, we have been seeing a big benefit over last two years. Perhaps, David, you can comment on like, does the 2022 guidance include a continued benefit from lower return rates? So that's the first one. And then perhaps also a little bit comment on the marketing spend as a percentage of sales given that more volatile consumer demand environment you also flagged and others are also seeing you.
Sure. So, in terms of return rates, we definitely assume an ongoing normalization and therefore only a minor or smaller impact on 2022. Overall, we actually expect our fulfillment cost ratio to increase in 2022, driven by the normalization of return rates, but also by our continued investments to drive convenience for Plus members and also to make our operations and services more and more sustainable, for example, in the area of sustainable packaging.
When we think about our marketing expenses for this year, we assume a rather flat development year-over-year. But as we have repeatedly stressed today, we are still a business in a very agile manner. And as you know, if you follow us for a while now, we are steering marketing primarily based on ROI. And so we are not sticking to a pre-determined budget, but we will rather adjust our spending according to the opportunities that we see in the market.
Thanks. [indiscernible] (01:21:15) moving away a little bit from logistics, going more into also our longer term, there's a question on ZMS and Robert, I think you are the right one to answer that one, it's like, can you expand and explain a bit further what roles ZMS and other Zalando data services, data [ph] monetization (01:21:35) in general will play in our starting point for fashion strategy?
Yeah. Sure. So like, as our platform proposition towards customers is kind of expanding and we want eventually like every fashion item to be available on our propositions. There is [ph] as well like, a question, like, how – what's (01:21:54) actually the most effective way that actually brands can as well engage with customers as well on Zalando and how can actually tell their stories, especially in the environments [ph] like where it is (01:22:07), I think, a lot of offer available and this is really where the ZMS service actually helps our brand partners to tell their story, tell their brand and as well shed more light on specific articles that they want, like, customers to more engage with. So this is the purpose of ZMS. And as we have highlighted in our long-term work, we assume this would be like in the area of our 3% to 4% of the GMV, will be like the ZMS in terms of our platform proposition and we are – yeah, and we are very, very happy so far with the developments of how [ph] ZMS (01:22:48) business actually – yeah, [ph] is assumed by (01:22:51) the brand partners.
Thanks, Robert. Then there's also another question coming from Christian from Hauck & Aufhäuser. David, given your comfortable net cash position, how do you think about inorganic growth and where would you see possibilities for acquisition [indiscernible] (01:23:11) and beauty or tech?
Well, first of all, I think it's great to have that comfortable cash position as you call it, because [ph] and then (01:23:22) really enables us to take that true cycle long-term view on the business, right, and to make sure that we can actually make all the necessary investments that allow us to achieve our mid-term ambition of €30 billion GMV in 2025 and also our long-term ambition of serving more than 10% of the total European fashion market. Apart from that, you'll see us mainly investing into our own infrastructure and in our capabilities, obviously, also our technology platform as part of these capabilities. Yes, we are most likely continue to also look at inorganic opportunities, but primarily those that help us advance when it comes to building, scaling and innovating our capabilities. So, for example, the last acquisition that we did was around Size and Fit, and I think you should expect us to do similar acquisitions in the future when they can help us accelerate our journey towards being the starting point of fashion.
Okay, thanks. Before coming back a little bit to our current and 2022 outlook, perhaps another more strategic question sticking with you, David, on a second is like our financial capabilities and probably mainly referring here to our Zalando payments offering. Do you see any potential to include this as a service to brands as part of the Partner Program over time?
Well, the thing is, all the brands and also connected retailers that participate in our platform use our payments service by default, right. So it is actually part of our Partner Program and Connected Retail offer and part of the reason why brands and connected retailers pay a commission to us. So, part of that commission is a payment services related. But I think it's still a good question, because we definitely see that we've built a very strong payments capability. We process, yeah, more than €20 billion transaction volume through our internal payment systems, and we've also built a very strong buy now pay later offering, which actually accounts for more than two-thirds of their payment volume. It's the most popular payment method for our customers and many of our markets, and it's also something that has obviously helped us to drive both customer satisfaction and also conversion. And therefore, we definitely are evaluating different opportunities on how we can leverage this strong capability, particularly in the area of buy now, pay later, and also find ways to offer that to partners also outside of Zalando.
Okay, thanks a lot, David. And looking into a little bit more to the brands itself, there was also a question again from Charlie, from Exane PNB. Would you also consider helping brands with their e-commerce technology as well as the logistics? [indiscernible]
01:26:33) beyond logistics, I think, logistics and I think it's a very strong and clear value-add for our partners. And that's why we want to open that up and then really enable brands not only for our channel also across like different touchpoints, but like marketing, for example, is also a good example. With ZMS, I think we're also developing capabilities that really help brands to engage with their audience, yeah, target like the right audience and help them position to message and their brand in the right audience. And I think we can actually build on that, because part of that is also like strong customer insights, yeah, and really help brands using those insights being in product development, but also in the messaging towards customers. So, I think building on that, yes, I think there are like ways to support brands overall in their digital strategy. And I think it also gets more and more holistic how we can actually help them through our capabilities, yeah, and not only on Zalando, but also beyond that. Yeah.
Yeah. David, you stated in your presentation earlier today as the pre-recording on the customer metrics and how they have developed and what nice positive impact we have seen is, there's a question from Jürgen from Kepler Cheuvreux asking, can you provide some additional details where you expect to see the biggest changes with regard to our customer metrics in 2022?
Sure. So I think if we look back at the past 24 months that have driven some exceptional developments for the business overall, but also for our key customer metrics, I think from me, the two that stand out, in particular, are the one around our active customer growth and particularly the acceleration in new customer growth that I've also focused on in my performance deep dive today. And the second key thing to highlight would probably be the basket size development, which obviously benefited significantly from the lower return rate that we've already talked about today. And so these are probably also the two key metrics, where I would expect a normalization. So in the active customers, we would expect our new customer growth to return to, let's say, pre-pandemic levels. And on the basket size, we would expect to see the normalization of the return rate lead to a decrease in the basket size for this year.
Thanks. The last question, David is going to [indiscernible] (01:29:19) on competitive on pricing. Adam from Deutsche Bank is asking, Zalando was more competitive on pricing in the second half of 2021, but now – but looks to set to increase prices in 2022. Does this suggest you will be a price taker rather than a price setter? Any color you may give here would be helpful?
Maybe to answer it first from a strategic angle. For us, price is not our main differentiator. And so, it's not our goal to lead on price. For us, it's a lot more important to reinvest into experience and engage with customers through that experience and through a great assortment access providing like anything that is relevant for customers telling, like all the great like brand stories and engage with like content, it's about creating like experiences on our propositions, be it like for fashion or for beauty or for designer or for pre-owned. Yeah, so that's important. And then, also convincing through a great convenience experience, then linking everything through like our Plus, so I could be talking about that for a while, but I think those components are for us far more important and in future we are thinking further around like how to engage with customers in even better way and then also entertain them more.
Concretely, to like price developments, and yes we do see price increases in the market and we're like also in close discussions with our brand partners. So, it looks like we have price increases in like mid to high-single digit area, which I think we have like over the past decade, we haven't experienced such a shift in pricing. So, that is something I think, that we will see and where we also see like prices adapting and where we are also closely monitor like what is like the customer reaction, how do they also shift like in different price buckets. But I think also across like our platform as we have a very broad assortment and work with almost 6,000 partners. I think we also have to leeway to also adapt to that and offer what is most relevant for customers.
Thanks. Yeah, that concludes today's Q&A session with the both Davids here on stage and Robert virtually. Thanks everyone for attending today's full year publication. As always, we will be on the road to discuss our results in the next couple of days. We will also host an analyst roundtable in the week, and if there are any remaining questions do not hesitate to contact us.
In the meantime, stay well and yeah, get well through these times and hope to see you soon. Thanks, everyone. Bye-bye.