Economic ZOOT Achieves a 10% Revenue Growth in 1H 2018. Weather Affected Fashion Sales.
ZOOT, the leading Czech fashion online store, achieved an almost 10% revenue growth in the first half of 2018 compared to the same period in 2017. Its income rose to CZK 518 million. During the first half of 2018, ZOOT continued to expand its customer base, almost reaching the 500 thousand customer mark, which amounts to approximately a 24% increase compared to the first half of 2017. However, due to abnormal weather conditions in 2018, the adjusted EBIT results fell to CZK 55.2 million. The gross profit dropped 0.6%, to CZK 223 million, compared to the first half of the previous year.
The weather has left its impact on the financial results of the Czech leading fashion online store. Due to the abnormal trends in this year’s spring and summer seasons, ZOOT sold more sale items than usual and so, despite achieving a revenue growth and a customer base growth, it hit a negative economic result.
“The weather plays an important role in fashion sales. This year, its negative impact was felt by not only our store, but by fashion retailers across the whole of Europe. During the post-Christmas sales period, the outside temperatures were above average, and then, the spring season fell onto below average temperatures (that stayed below average until mid-April). Yet, from mid-April to last week, we experienced an extra-long summer season (which, at the office, we jokingly call the Florida Summer)” explained ZOOT’s CEO, Ladislav Trpák.
Compared to the 1H 2017, the number of items sold rose by 22% to 890 thousand items. The bestselling categories were women’s dresses, tops and shoes. In the 1H 2018, the most popular brands from ZOOT’s portfolio were Vero Moda, Dorothy Perkins, GEOX shoes, and ZOOT’s own label OJJU.
“Due to the unfavourable economic results in the first half 2018, ZOOT’s management has taken steps to improve the company’s performance. We have centralised our Slovak and Romanian marketing and sales strategies to the Czech Republic. So, now, we have one Prague based team working on these strategies for all our branches. By the first quarterly of 2018, the number of ZOOT employees dropped by 12%, which is about 59 staff positions,” added Ladislav Trpák. The company has taken measures aimed at optimising its resources and reducing its operational costs. At the same time, it implemented improvements to ensure proper functioning of customer relationship management. Thanks to this, ZOOT is now also actively in touch with its non-profitable customer base. The impacts of these improvements and cost-cutting measures will be reflected in the second half of 2018.
ZOOT’s leadership also re-evaluated its expansion strategy in Romania. On the basis of the present financial results, T&B stores have ended there, wherein the focus is now on home deliveries. Also, limits have been set for the amount of discount offers available to Romanian customers. Due to this, ZOOT has partially written off its receivables of almost CZK 64 million to this distributer, for these negatively affected the 1H 2018 financial result.
In the second half of 2018, ZOOT is aiming for a similar tempo of 10% revenue growth. The main measures ZOOT wants to implement now, are the ones that will reduce the amount of returns the store gets by about 30%. These measures will include shopping basket limits, prepayment for particular customer segments, and positive motivation for credit systems. ZOOT will continue to optimise its operational costs so as to return to profitable results in the 4Q 2018.