Berlin The Hamburg online fashion retailer About You has apparently left the crisis behind. “We have meanwhile bottomed out and the recovery is now imminent,” company boss Tarek Müller told Handelsblatt.
In the past quarter from March to May, the company surprisingly managed to break even, as the Zalando competitor announced on Wednesday. This was last the case at the height of the corona boom in late 2020 to early 2021.
Müller no longer wants to go back to the time when business was in the red. “We will not only be profitable this year, but also in the years to come,” announced the 34-year-old. Nevertheless, sales should also pick up faster again: “We are certain that we will return to clearly double-digit growth figures from next year.”
This confidence was extremely well received on the stock market. The About You paper, which had been badly hit for a long time, jumped by more than 30 percent on Wednesday, but was still only worth around a quarter of the issue price from the IPO almost exactly two years ago.
About You’s optimism rubbed off across the industry. The larger competitor Zalando also benefited from this. The stock rose almost 10 percent in the wake. On August 4th, the Berlin Dax group gives an insight into its past quarter. The papers of the British competitors Asos and Boohoo were also clearly in the plus.
Good news has recently been rare in the industry. On the one hand, high inflation and the poor consumer climate meant that people bought less clothes. On the other hand, many were drawn back to retail after the pandemic, and online shopping lost some of its appeal.
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Zalando and About You felt the effects of that. Both took measures to get the problems under control. At Zalando, it was a large-scale job cuts program. About You, in turn, drew a line under its geographic scope. For a long time, the company, which originated from the Hamburg Otto Group, expanded rapidly into new countries, which has now come to an end.
Savings pay off
“Because that costs a lot of money, especially in big countries like Italy, France, Spain. If these one-off campaigns are eliminated, you save significantly,” says Müller about the new corporate strategy. Marketing costs have halved in the past quarter.
In addition to the lack of expenditure for new start-ups in other European countries, Müller also cut back on service providers, freelancers and agencies. He also hired fewer new employees.
This ensured that About You achieved an adjusted operating profit (Ebitda) of 4.2 million euros in the past quarter after a negative result of almost 29 million euros in the same period of the previous year. That was above analysts’ expectations.
The profitability of the Scayle platform also contributed to this development. About You not only sells fashion, but also technology. The Hamburg company sells its shop software as a licensed product and has acquired customers such as Deichmann, Fielmann and S.Oliver.
Via direct message to the stars
Compared to Zalando, About You focuses more on the younger generation. In order to address them, the company cooperates with celebrities. Müller is sticking to this despite the latest savings: “We are continuing to invest in our brand and the range.” Recently there have been major collaborations with international stars such as Millie Bobby Brown, Katy Perry and Emma Roberts.
The head of the company is certain that these names and their collections will continue to drive growth in the years to come. “This type of advertising is very sustainable, perhaps comparable to exclusive series from streaming services like Netflix,” said Müller. If you want to wear the clothes of the stars, you have to come to About You.
The About You boss has cut spending in particular
(Photo: Johannes Arlt for Handelsblatt)
In the meantime, About You no longer has to bother with celebrities. Many volunteered to be able to work as a designer, explained Müller. And if they don’t, they become active themselves: “In Germany we sometimes write them a message on Instagram.” Recently, Hugo Boss also scored with such collections and well-known faces.
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About You is now active in 29 countries, in which 450 million people live. “That’s enough for strong growth in the coming years,” said Müller.
In the past quarter, however, revenues only increased by 0.6 percent to 507 million euros. Above all, robust business in the German-speaking region contributed to the plus; in Eastern Europe, for example, things were less smooth due to the persistently high inflation rates. In the 2023/24 financial year, which ends in February, sales should nevertheless increase by one to eleven percent.
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