EUROPES LEADING ONLINE FASHION DESTINATION Q2/2018 Earnings Call - PowerPoint PPT Presentation

EUROPE’S LEADING ONLINE FASHION DESTINATION Q2/2018 Earnings Call August 7, 2018

HI GHLIGHTS AND BUS I NE S S UP DAT E

H IG H L IG H T S Q 2 /2 0 1 8 STRONG REVENUE GROWTH +21% CUSTOMER KPI’S IN LINE WITH HITTING ALL-TIME HIGHS +30% TARGET CORRIDOR orders yoy €94m ADJ. EBIT PARTNER PROGRAM WITH SOLID GROWTH AT 10% OF GMV VS. PRIOR YEAR 3

PA R T N ER PR O G R A M A T 1 0 % O F G M V Growth above plan Partner program countries • Partner program share 10% of Group GMV in Q2/18 • Growth driven by top partners Strong push in internationalization NEW • 65 internationalizations • Launch of Poland – available in 14 markets now ZFS further gaining momentum • Now live in all 13 EU-countries • Added 10+ brands to ZFS – strong pipeline for H2/18 4

C O N T IN U O U SL Y EVO L VIN G C U ST O M ER PR O PO SIT IO N Increased Reach Launch of Ireland and Czech Republic adds 15.4m potential new customers Pay Later Enhanced Shopping Experience Multi-language onsite experience to increase Allophones frequency of visits and conversion (allophones) More Convenient Payment Allophones Introduction of “Pay Later” in Denmark and Italy with positive impact on net basket Pay Later Improved On-Time Delivery AI-enabled delivery prediction rolled out with positive impact on customer satisfaction 5

O F F PR IC E W IT H O U T ST A N D IN G D EVEL O PM EN T IN T H E L A ST 8 YEA R S – SU C C ESSF U L L Y L EVER A G I N G T H E Z A L A N D O PL A T F O R M BRANDS CUSTOMERS picture picture picture picture • Shopping club addressing • Synergetic with Zalando platform: • Allows brands to manage discount affine customers additional consumer reach, excess inventory while • Daily sales campaigns with solves overstock problem for maintaining brand image • International distribution brands and Zalando 50-70% discount • Strong financials: ~45% p.a. • 15m members in 14 markets growth since 2016 and profitable 6

F I NANCIAL UP DAT E Q2/ 2018

S T R O N G R E V E N U E G R O W T H I N L I N E W I T H T A R G E T C O R R I D O R FASHION STORE – DACH (Q2) REVENUE: GROUP (YTD) GROUP (Q2) Fashion Store Offprice 626 2,526 1 1,330 1 542 Other 2 (in €m and %) 1,101 1 2,081 1 Q2/17 Q2/18 2,327 1,233 FASHION STORE – REST OF EUROPE (Q2) 1,926 1,017 608 475 235 115 155 82 201 101 166 82 H1/17 H1/18 Q2/17 Q2/18 Q2/17 Q2/18 H1/18 (H1/17) contains - €237m ( - €166m) reconciliation of internal revenues. Q2/18 (Q2/17): - €119m ( - €81m). (1) 8 Segments “Other” including private label offering zLabels and various emerging businesses. (2)

C U S T O M E R K P I ‘ S H I T T I N G A L L - T IM E H I G H S ACTIVE CUSTOMERS AVERAGE ORDERS PER ACTIVE CUSTOMERS All-time 4.2 3.7 (in #m) high (LTM in #) Placed 29m orders! Q2/17 Q2/18 24.6 AVERAGE BASKET SIZE AFTER RETURNS¹ 21.2 64.5 60.4 Q2/17 Q2/18 GMV PER ACTIVE CUSTOMER² €253 €238 Q2/17 Q2/18 Q2/17 Q2/18 Defined as the transactional revenue (incl. VAT and transactional volume of Partner Program) after cancellations or returns d ivided by the number of orders. (1) 9 GMV (gross merchandise volume) per active customer = average orders per active customer (LTM in #) x average basket size afte r r eturns (in €). (2)

Q 2 / 1 8 : A D J . E B I T W I T H S O L I D G R O W T H V S . P R I O R Y E A R FASHION STORE – DACH (Q2) ADJ. EBIT: GROUP (YTD) 1 GROUP (Q2) 10.6% 9.6% Fashion Store Offprice 4.9% 3.7% 7.4% 7.1% 60 58 Other (in €m and %) 102 2 94 2 94 2 82 2 Q2/17 Q2/18 FASHION STORE – REST OF EUROPE (Q2) 91 92 92 75 3.6% 5.3% 32 18 16 17 12 8 - 7 -16 - 5 -8 H1/17 H1/18 Q2/17 Q2/18 Q2/17 Q2/18 Excluding equity-settled share- based compensation costs (“SBC”) and effects from business transactions that do not recur regularly (1) of €22.3 in H1/18 (H1/17: €10.9m). Q2/18: € 6 .7m (Q2/17: €5.5m) . 10 H1/18 (H1/17) contains €2m (€0m) reconciliation of internal adj. EBIT. Q2/18 (Q2/17): €2m (€0m). (2)

P R O F I T A B I L I T Y A L M O S T O N P R I O R Y E A R L E V E L D E S P I T E C O N T I N U E D G R O W T H I N V E S T M E N T S COSTS AND MARGINS 1 H1 Q2 (in % of revenue) Delta 2017 2018 Delta 2017 2018 Increased price C O S T O F S A L E S (55.6%) (57.1%) 1.5pp (53.0%) (54.2%) 1.2pp investments G R O S S P R O F I T 44.4% 42.9% (1.5pp) 47.0% 45.8% (1.2pp) Continued F U L F I L L M E N T C O S T S (25.9%) (28.2%) 2.3pp (26.8%) (28.2%) 1.4pp convenience and warehouse invest and M A R K E T I N G C O S T S (8.3%) (6.6%) (1.7pp) basket size economics (7.3%) (6.4%) (0.9pp) A D M I N I S T R A T I V E Mainly reallocation (5.3%) (4.4%) (0.9pp) (5.5%) (4.2%) (1.3pp) E X P E N S E S & O T H E R into other cost lines 2 A D J . E B I T 4.9% 3.7% (1.2pp) 7.4% 7.1% (0.3pp) Excluding equity-settled share- based compensation costs (“SBC”) and effects from business transactions that do not recur regular ly. (1) 11 Changes resulting from new segment structure. Prior year figures not restated. (2)

C A P E X S P E N D B A C K - E N D L O A D E D I N 2 0 1 8 CAPITAL EXPENDITURE 1 NET WORKING CAPITAL (END OF Q2) Intangibles (in % of annualized revenue) PP&E (in €m) 130 €16m (€ 37m) 23% 109 22% 67 0.3% 17% 52 -0.8% 28% Q2/17 Q2/18 H1/17 H1/18 Q2/17 Q2/18 12 Excluding payments for acquisitions of € 4.5m in H1 /18 (H1/17: €26.7m). Q2/18: €0m (Q2/17: €26.7m). (1)

OUT LOOK

G U I D A N C E S P E C I F I E D : R E V E N U E I N L O W E R H A L F & A D J . E B I T A T L O W E N D O F R A N G E REVENUE GROWTH IN THE LOWER HALF OF 20 – 25% RANGE ADJ. EBIT 1 : AT LOW END OF €220M – €270M RANGE 2 SLIGHTLY NEGATIVE WORKING CAPITAL + AROUND €350M CAPEX 3 Excluding equity-settled share- based compensation costs (“SBC”) and effects from business transactions that do not recur regular ly of ~€55m for FY/18E (1) (change vs. previously €35m: new LTI plan). Implies an adj. EBIT margin of ~4%. (2) 14 Excludes investments into M&A. (3)

L I Q U I D I T Y R E M A I N S O N H I G H L E V E L CASH FLOW DEVELOPMENT (in €m) Both Q1/18 and Q2/18 liquidity include investments into short-term deposits with maturity of more than 3 and less than 12 months of - €20m. (1) Includes investments in fixed and intangible assets and payments for acquisitions and change in restricted cash. (2) 16 Includes financing cash flow (- € 64.7m) and effect of exchange rate on cash and cash equivalents (- €1.9m). (3)

N E W S E G M E N T S T R U C T U R E B A S E D O N S A L E S - C H A N N E L V I E W – N O W I N C L U D I N G B R E A K O U T O F O F F P R I C E S E G M E N T • New segment structure Mostly sales from the private Mostly sales from the Fashion based on sales-channel label offering zLabels to the Store to the Offprice business Fashion Store perspective already introduced with Q1/18 reporting • Additionally, now breakout of E x a m p l e : Q 2 / 1 8 Offprice segment (previously part of Other segments) FASHION OFFPRICE OTHER RECONCILIATION GROUP (in €m) STORE • Everything else unchanged R E V E N U E 1,233.4 100.8 -118.7 1,330.0 114.6 vs. Q1/18 reporting: a reconciliation column T H E R E O F reconciles the segment figures 40.4 78.3 -118.7 0.0 0.0 I N T E R S E G M E N T (including internal and external T H E R E O F transactions) to the 1193.0 114.6 22.5 0.0 1,330.0 E X T E R N A L consolidated group figures (showing only external transactions) A D J . E B I T 92.2 -7.5 1.7 94.0 7.5 17

R E S T A T E D S E G M E N T F I G U R E S 1 €m Q1/17 Q2/17 Q3/17 Q4/17 FY/17 Q1/18 Q2/18 Revenue 980.2 1,100.5 1,074.7 1,333.7 4,489.0 1,196.0 1,330.0 Fashion Store 908.8 1,017.0 994.0 1,230.7 4,150.5 1,093.9 1233.4 thereof DACH 475.0 542.2 498.4 634.4 2,150.0 552.0 625.8 thereof intersegment 8.1 8.7 9.1 16.4 42.2 20.9 21.3 thereof external 466.9 533.6 489.4 618.0 2,107.9 531.1 604.5 thereof Rest of Europe 433.8 474.8 495.5 596.3 2,000.5 541.9 607.6 thereof intersegment 7.5 7.5 9.1 14.6 38.8 19.5 19.1 thereof external 426.3 467.3 486.5 581.7 1,961.6 522.4 588.5 Offprice 2 72.4 82.3 80.4 110.1 345.3 120.4 114.6 Other 84.3 81.9 90.6 88.5 345.3 99.8 100.8 thereof intersegment 69.8 64.5 72.2 64.6 271.1 77.7 78.3 thereof external 14.5 17.4 18.4 23.9 74.2 22.1 22.5 Reconciliation (85.4) (80.7) (90.3) (95.6) (352.0) (118.1) (118.7) Adjusted EBIT 20.3 81.8 0.4 112.6 215.1 0.4 94.0 Fashion Store 16.4 74.7 1.2 121.5 213.7 (0.2) 92.2 thereof DACH 36.4 57.6 17.6 81.9 193.5 16.6 60.0 thereof Rest of Europe (20.1) 17.0 (16.3) 39.6 20.3 (16.8) 32.2 Offprice 6.1 11.8 7.8 1.9 27.6 8.5 7.5 Other (2.2) (4.7) (8.6) (10.8) (26.3) (8.3) (7.5) Reconciliation 0.0 0.0 0.0 0.0 0.0 0.4 1.7 New segment structure based on a sales-channel perspective from Jan 1, 2018 onwards. (1) 18 Reported seperately from Q2/18 onwards. No internal revenue. (2)