Zalando plans Nordics base to speed deliveries as sales disappoint

By Emma Thomasson and Anna Ringstrom BERLIN/STOCKHOLM (Reuters) - Lower-than-expected quarterly sales hit shares in Zalando , Europe's biggest pure online fashion retailer, which said it would open a new distribution centre in Sweden this year to speed up delivery across the Nordic region. Faster delivery is becoming a battleground for online retailers as Amazon makes a big push into fashion and sets the pace in logistics with its Prime Now service that offers deliveries within one hour in some European cities. "Customers come to us because they fell in love with one specific fashion item and ideally they want to get it as fast as possible," Zalando co-Chief Executive Rubin Ritter told Reuters in an interview. Zalando's shares, which had jumped in recent weeks after rivals ASOS and Boohoo reported a bumper Christmas quarter, were down 3.5 percent at 0940 GMT, to make them the weakest performer on the European retail index <.SXRP>. Zalando said fourth-quarter sales rose 25-26 percent to between 1.086 billion and 1.094 billion euros (955 billion pounds). That was an improvement on the 17 percent growth rate in the third quarter, but shy of analysts' forecasts for 1.12 billion, according to Thomson Reuters Smart Estimates. "Q4 sales were up less than expected which was surprising given revenue beats from Boohoo and ASOS as margin looks to have been traded for revenue growth," said UBS analyst Adam Cochrane, who rates Zalando "sell". Zalando reports final results on March 1. It said it expects quarterly adjusted earnings before interest and tax (EBIT) of 81-104 million euros, based on preliminary figures, compared with analyst consensus for 86 million. Ritter confirmed a medium-term forecast for sales to grow 20-25 percent a year and said the firm was investing heavily in its service to keep up. ASOS, which is encroaching on Zalando's home territory with a new hub south of Berlin due to open soon, said last week it would accelerate its infrastructure investment as it expects sales to rise by nearly a third this year. FASTER DELIVERY Zalando said the new Nordics hub, which it hopes to be up and running by the end of the year, should cut standard delivery times in Sweden to 1-2 days from a current 2-5 days. Fashion retailer H&M's delivery time in its home market of Sweden is 3-5 days. H&M offers next-day delivery in Germany for 7.99 euros. Zalando, which operates from four giant logistics centres in Germany and one satellite hub near Milan, is building new warehouses in France and Poland, both due to open this year. Zalando does not break out sales for the Nordics, but Nordics head Kenneth Melchior told Reuters he was optimistic the region could reach 1 billion euros of sales in the coming years. Analysts forecast total Zalando sales will almost double to reach 6.7 billion euros by 2019 from the 3.6 billion it expects to record for 2016. Zalando is looking for a site about 20-30,000 square metres in Sweden -- about the size of its Italian hub -- and is prepared to invest a sum in excess of 10 millions euros. ($1 = 0.9387 euros) (Reporting by Emma Thomasson; Editing by Keith Weir)