The logo of fashion retailer Zalando is pictured in Berlin, Germany on April 10, 2019. REUTERS / Hannibal Hanschke / File Photo

  • Q2 sales up 34% to 2.7 billion euros, meet analyst consensus
  • T2 EBIT 184 million euros
  • 2021 sales up 26-31% to € 10.1-10.5 billion
  • 2021 adj. EBIT seen in the upper half of the 400 to 475 million euro range
  • Stocks fall 8% at the start of the trading day

BERLIN, Aug.5 (Reuters) – Shares of Zalando (ZALG.DE) fell on Thursday after the German online fashion retailer said it spent significantly more on marketing to keep its customers shopping online so as stores reopen due to easing coronavirus lockdowns.

Europe’s largest fashion e-commerce player had 44.5 million buyers at the end of June after winning customers in the first foreclosure in 2020, but the company had to increase its marketing spend by 4.6% in the second trimester.

“Zalando has invested significantly more in customer acquisition and brand marketing to seize the full demand opportunity in the second quarter of this year,” he said.

Advertising prices have increased as demand rebounded, including in the travel sector, and people moved out of their homes, CFO David Schroeder told analysts, adding that he expects to lower long-term marketing costs.[nL8N2PC1ZO]

Second-quarter revenue was € 2.73 billion ($ 3.24 billion) and adjusted operating income at € 184.1 million, both in line with average analyst forecasts .

Investors, accustomed to Zalando beating forecasts last year, hoped for better.

JP Morgan analysts said results were “strong but disappointing against the backdrop of expectations,” while Credit Suisse analysts said unusual weather conditions in much of Europe could potentially weigh on results of the third trimester.

Zalando shares were down 8% at 0846 GMT on XGMT.

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Zalando will focus more on growing beauty product sales in the future after announcing a strategic partnership with LVMH’s Sephora (LVMH.PA) in June, Schroeder said.

He said online sales of beauty products reached 11% of the total market in 2020 from 8% in 2019, but were still well below the fashion figure, noting that three in five customers also buy clothes when they buy beauty products.

Zalando reiterated that he expects annual sales to increase 26-31% to € 10.1-10.5 billion and said he now expects adjusted profit before interest and taxes (EBIT ) to reach the top half of its guided range of € 400 million to € 475 million.

Zalando also connected 4,700 physical stores to its platform, an initiative it accelerated during the pandemic.

($ 1 = 0.8448 euros)

Reporting by Emma Thomasson, editing by Anil D’Silva and Elaine Hardcastle

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