PARIS – European e-commerce behemoth Zalando saw revenues fall 2.5 percent within the second quarter to 2.6 billion euros in what the corporate called a “difficult retail environment.”

But net income surged 87 percent to 144.8 million euros year-on-year, because the Berlin-based company grew its achievement and logistics offering, and focused on cost-cutting measures.

“Amid the temporarily difficult retail environment, we proceed to drive sustainable efficiencies in achievement and marketing,” said Zalando chief financial officer Sandra Dembeck. “These efforts have paid off this yr with adjusted EBIT almost doubling within the second quarter. Such success puts us in pole position to shift our focus more towards investment and future growth initiatives.”

The revenue drop got here as the corporate strengthened its product offering, onboarding latest athletic brands including Lululemon and Hoka, and expanding its beauty portfolio with luxury brands Lancôme, Mugler and Shiseido rolling out to more markets.

The corporate looks on the e-commerce metric of gross merchandise value, or GMV, to place a figure on how much inventory the platform has moved separate from its logistics and marketing services. That number was down 1.8 percent to three.7 billion euros value of merchandise moved within the second quarter.

Zalando’s partner businesses, where brands and retailers directly connect their warehouse inventory to the platform, grew 7 percent in GMV within the quarter, while its achievement services sector was up 3 percent year-on-year. Zalando’s achievement solutions sector now represents greater than 60 percent of things shipped by the corporate.

Zalando added greater than 1 million shoppers within the quarter, registering 50.5 million energetic customers, with mixed results. Orders placed within the quarter were all the way down to 63.2 million from 67.8 million, while the common basket was as much as 58.1 euros per order from 55.9 euros. Revenues at the style store were flat at 2.09 billion euros.

One area that benefitted from the competitive retail environment was its off-price shopping club, Lounge by Zalando. The discount division’s revenues were up 16 percent to 436.4 million euros.

The outcomes were largely according to analysts’ expectations.

“Amidst a difficult backdrop, we consider Zalando is well positioned, owing to its platform strategy and because the leading online fashion destination in Europe, to outperform the net market. Longer-term, the corporate has ample levers to drive growth including beauty, pre-owned and premium fashion, and we consider group margins can greater than double over time,” RBC Europe analyst Wassachon Udomsilpa said in a research note.

The corporate narrowly upped its operating profit guidance for the total yr from 280-350 million euros to 300-350 million euros, whiled noting the GMV and revenue would likely are available in between down 1 percent and up 4 percent.

The corporate noted it launched an AI-enabled sizing tool aiming at lowering the return rate within the test markets of Germany, Austria and Switzerland.