* New brand campaign, app, website and packaging
* ASOS "complementary" but no merger expected
* Zalando expected to announce IPO in first half of Sept
* Group oper margin 1.2 pct, higher in German-speaking core
* Says still room to grow in European fashion market
(Adds details from media presentation)
By Emma Thomasson
BERLIN, Aug 28 Zalando unveiled a new
advertising campaign, website, packaging and apps on Thursday -
and gave a deeper insight than ever before into the inner
workings of Europe's biggest online fashion player as it
prepares for a likely listing.
At the German retailer's first-ever news conference, in a
converted industrial building in trendy east Berlin, its three
management board members said the start-up launched in a
basement just six years ago was now growing up.
"Zalando is entering a new phase," said co-founder David
Schneider. "Today we have one of the largest and most
sophisticated warehouses across Europe. We could easily double
our sales volume and not see such a problem."
Zalando is set to announce in the first half of September
the listing of a 15 percent stake that could value the company
at about 6 billion euros ($7.9 billion) in one of Germany's
biggest tech flotations for years, sources have told Reuters.
The Zalando team declined to comment on speculation of an
initial public offering (IPO) on Thursday, with board member
Ruben Ritter sticking to the standard line that a listing
remained an option for the company.
An IPO would come amid a flurry of e-commerce flotations
this year, with Chinese giant Alibaba IPO-ALIB.N set to list
soon as well as German venture capital firm Rocket Internet
which helped launch Zalando and many other start-ups.
LOUD TO FASHIONABLE
Earlier on Thursday Zalando, in which Sweden's Kinnevik
is the biggest investor with a 36 percent stake, said
first-half sales rose 29.5 percent to 1.047 billion euros and it
made its first-ever operating profit. It earnings before
interest and tax (EBIT) of 12 million euros compared with an
operating loss of 72 million a year ago.
Ritter said the turn to profit had come from efficiency
improvements across the board, including in marketing, new
automated logistics facilities and the need for fewer markdowns
due to more predictable weather in recent months.
He said Zalando was now one of the biggest employers in the
German capital - long plagued by high unemployment. The company
has a total staff of 7,000 people, with an average age of just
29, and about two-thirds of them on unlimited contracts.
Zalando, which began selling shoes in 2008, now ships 1,500
brands to customers in 15 countries, gaining widespread
visibility with its "scream for joy" slogan and ads showing
delighted customers tearing open Zalando packages.
Gentz said the firm planned to focus more on fashion in a
new advert that shows a woman carrying a Zalando package
storming into a staid catwalk show where everybody is clad in
black and getting everybody out of their seats to dance.
"We are now entering into a new phase of brand communication
... from being loud to being fashionable," he said.
Gentz said Zalando was also overhauling its website to allow
personalised fashion recommendations, bringing in new packaging
that makes it easier for customers to return unwanted purchases
and investing more in product presentation.
The company, which said more than 40 percent of its traffic
comes from mobile devices, is also launching an app that helps
shoppers find and buy clothes on the go by photographing outfits
they like on a smartphone.
"NO ASOS MERGER"
Zalando's most direct competitor is Britain's ASOS,
which has seen its shares fall sharply this year after a profit
warning and a warehouse fire, although they jumped on takeover
speculation on Wednesday.
Schneider said Zalando and ASOS were fairly "complementary"
given the German company's broader target market and the ASOS
focus on 20-somethings and the British market - where Zalando is
still weak. But board member Robert Gentz dismissed speculation
that the two could one day merge given they have a common
investor in Danish magnate Anders Holch Povlsen.
Zalando's high rate of returns - an average of about 50
percent - has been a concern for some investors, but Ritter said
the firm did not want to make returning goods more difficult as
tests had shown that put customers off making a purchase in the
first place, ultimately hurting profits.
The retailer, which makes 60 percent of its sales in
Germany, Switzerland and Austria, said its operating margin was
1.2 percent in the first half of the year, compared with a
negative 8.9 percent a year ago, driven by the core
German-speaking region which made a margin of 4.6 percent.
Sales growth slowed to 25 percent in the second quarter from
35 percent in the first quarter, but Ritter said Zalando was
still growing faster than the broader e-commerce market, noting
the huge potential to grow further given that the European
fashion market is worth 420 billion euros.
The company's total number of active customers rose to 13.7
million from 11.6 million a year ago.
Ritter said Zalando could eventually expand to more markets
in eastern Europe although it does not have any immediate plans.
(1 US dollar = 0.7590 euro)
(Editing by Maria Sheahan and Pravin Char)