Zalando sales growth slows during mild winter

BERLIN, Germany - Europe's biggest online fashion retailer Zalando saw sales growth slow in the second half of 2013 as a mild winter led to high levels of discounting and it took a breather from expansion into new markets.

The Berlin-based retailer, which started selling shoes in Germany five years ago and now ships 1,500 different brands to 15 countries, is viewed as a prime candidate for a listing this year and competes with Britain's ASOS.

Rubin Ritter, member of the Zalando management board, told Reuters that an initial public offering - which could be the biggest German tech listing since chip maker Infineon in 2000 - was a possibility but not an immediate priority.

"An IPO could be an interesting option going forward but right now there is no decision on this topic," he said.

Sales grew 52 percent to 1.76 billion euros ($2.41 billion) in 2013, with the growth rate in the first half helped by the seven new markets it entered in summer 2012, while a late start to the summer and a mild winter caused high discounting.

Last month, shares in Zalando rival ASOS tumbled after it said retail sales growth slowed to 38 percent in the four months to Dec. 31, compared with 47 percent in the fourth quarter of its 2012-13 year.

Zalando said it was breaking even in its core markets of Germany, Austria and Switzerland, where it made more than 1 billion euros of sales in 2013. Its operating margin improved by 0.5 percentage points from minus 7.2 percent in 2012.

Ritter declined to say when the business might turn a profit but said Zalando, which has advertised heavily to win market share, would spend less on marketing as a percentage of sales and keep expanding higher-margin private label brands.

"We will continue to try to strike this balance between investing into the next decade but also to work on our efficiency," he said.

Zalando said Christina Stenbeck, chairman of its biggest investor Swedish firm Kinnevik, would take over as chair of its supervisory board from Kinnevik Chief Executive Mia Brunell, who is stepping down from Kinnevik.