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Zalando Reports 18.5% Jump in Q2 Operating Profit

The logo of fashion retailer Zalando is pictured at the new headquarters in Berlin, Germany, April 10, 2019. (Reuters)
The logo of fashion retailer Zalando is pictured at the new headquarters in Berlin, Germany, April 10, 2019. (Reuters)
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Zalando Reports 18.5% Jump in Q2 Operating Profit

The logo of fashion retailer Zalando is pictured at the new headquarters in Berlin, Germany, April 10, 2019. (Reuters)
The logo of fashion retailer Zalando is pictured at the new headquarters in Berlin, Germany, April 10, 2019. (Reuters)

Online fashion marketplace Zalando reported an 18.5% rise in its operating profit for the second quarter on Tuesday, helped by inventory management and lower order fulfilment costs, as its sports, designer and beauty segments drove growth.

Zalando has focused on higher-priced brands and the growing sportswear category, along with scaling up its partner business, as it faces competition from fast-fashion retailers with cheaper offerings such as Shein.

Quarterly adjusted earnings before interest and tax (EBIT) rose to 171.6 million euros ($187.9 million) from 144.8 million in the same period last year, Zalando said.

Its qross merchandise volume (GMV) - a key revenue metric measuring the total value of all goods sold - rose 2.8% on the year to 3.8 billion euros in the second quarter, while revenue was up 3.4% at 2.6 billion euros.

Zalando also said Chief Financial Officer Sandra Dembeck had decided not to renew her contract beyond the current term ending on Feb. 28, 2025.

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Zalando Uses AI to Speed Up Marketing Campaigns, Cut Costs

FILE PHOTO: A person with a shopping bag of Zalando outlet walks along Kurfuerstendamm shopping street looking for bargains in Berlin, Germany, December 3, 2022. REUTERS/Lisi Niesner/File Photo
FILE PHOTO: A person with a shopping bag of Zalando outlet walks along Kurfuerstendamm shopping street looking for bargains in Berlin, Germany, December 3, 2022. REUTERS/Lisi Niesner/File Photo
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Zalando Uses AI to Speed Up Marketing Campaigns, Cut Costs

FILE PHOTO: A person with a shopping bag of Zalando outlet walks along Kurfuerstendamm shopping street looking for bargains in Berlin, Germany, December 3, 2022. REUTERS/Lisi Niesner/File Photo
FILE PHOTO: A person with a shopping bag of Zalando outlet walks along Kurfuerstendamm shopping street looking for bargains in Berlin, Germany, December 3, 2022. REUTERS/Lisi Niesner/File Photo

European online fashion retailer Zalando is using generative artificial intelligence to produce imagery faster for its app and website, it said on Wednesday, as AI shakes up the fashion industry and cuts costs.
Zalando, which sells branded clothes, shoes, and accessories across 25 markets in Europe, is using AI to produce imagery quickly enough to respond to short-lived fashion trends spread on social media. It is also developing AI-generated "digital twins" of models to use in its marketing.
"We are using AI to be able to be reactive," Matthias Haase, vice president of content solutions at Zalando, told Reuters in an interview.
Using generative AI cuts the time needed to produce imagery to around three to four days from six to eight weeks, and reduces costs by 90%, Haase said, adding the AI-generated content drives greater engagement from customers.
"It's not because of AI content that is better than human-created content, it is really about how new, how relevant it is to our customers," Haase added.
Around 70% of Zalando's editorial campaign images were AI-generated in the fourth quarter of last year as it has increased use of the technology. AI-generated images illustrated Zalando's recap of the year's biggest trends, including "brat summer", "mob wife", and double denim.
For an industry used to costly, meticulously planned fashion shoots on sets or in far-flung locations, the prospect of using AI to speed up production and use marketing money more efficiently is of particular appeal to retailers with far smaller budgets than the big, luxury players.
Zalando is the latest retailer to try out AI-generated digital twins of models, after Sweden's H&M in March said it created digital twins in collaboration with a modelling agency.
The AI-generated three-dimensional replicas enable Zalando to feature a model in a campaign and show an exact replica of that model in the app's product pages, without needing to take hundreds of photos.
Asked how generative AI could affect job prospects for fashion photographers, Haase said traditional fashion shoots will still be needed, but that photographers and other creatives will also have to adapt to using AI tools.
"Creative people fear that AI makes creatives redundant," Haase said. "I don't see that at all, to be honest... I see it rather that creative minds have now, instead of two hands, six hands."