Good morning, ladies and gentlemen, and thank you for joining us on our conference call today to review our Q4 and full year 2015 financial results. As usual, with me today are Ruben Ritter, one of our 3 Co CEOs responsible for Finance and Operations and Jan Kempe, SVP, Finance. Will be available for Q and A following today's call. Before we begin, also as usual, I'd like to remind you that we'll be making forward looking statements during this call regarding future events and financial performance. These statements are based on assumptions that are believed to be reasonable at the time they're made are subject to significant risks and uncertainties.
You should not rely on these forward looking statements as predictions of future events, and we undertake no obligation to update or revise these statements. Our actual results may differ materially and adversely from any forward looking statements discussed on this call due to a number of factors, including, without limitation, changes in general economic conditions, in particular, economic conditions in Europe, changes affecting interest rate levels, changes in competition levels, changes in laws and regulations or the potential impact of legal proceedings and actions and Solana's ability to achieve operational synergies from past or future acquisitions. This call is being recorded and webcast live on our Investor Relations website and a replay of the call will be available later today. Now I'll turn over the call to Ruben, who will review our Q4 and full year 2015 results.
Yes. Thank you, Birgit, and good morning also from my side. Thank you for joining today's earnings call. As always, the presentation will have four parts. First, we will focus on the results and business highlights 2015.
Then we'll have a closer look at our financials and then come to the outlook twenty 16 and beyond before we then dive into your questions. So let's get started with the results and business highlights for the full year 2015. I think we can say 2015 was a great year full of many achievements. First of all, financially, we have achieved outstanding revenue growth at solid profitability despite very significant investments into the long term that we have made. Secondly, we have made customers happier than ever, which is important to us.
Our model was always based on convenience. And this year, we have reached new all time highs in all customer satisfaction metrics. And thirdly, we have significantly advanced our brand relations to the next level, and we are more and more becoming the digital strategy for our brand partners. And last but not least, we have invested in 2 very important enablers of our future growth, which is we have scaled the tech team quite significantly, and we have worked to extend our logistics footprint for the future growth. And I'll now go through these four points in a bit more detail, starting with the financials.
So as always, let's take a short look at our 3 key financial dimensions: growth, profitability and free cash flow. So what stands out for 2015 is the reaccelerated revenue growth that we have shown. In the IPO, you will recall that we talked about a long term growth corridor of 20% to 25% and that in 20 fourteen, we achieved to be at the high end of this corridor. For 2015, we continued to guide to this corridor but actually achieved 34%, which is significantly beyond this corridor. And we always said, if there's opportunity to outperform our corridor, we will take it because we have a preference for growth, and we think it's the right strategy for the long term.
And in 2015, there are very clearly were these opportunities to grow faster, and we were quite successful in realizing them. I think you should take a second to think about the magnitude of this outperformance. So it's 8 percentage points faster growth than last year. And it's an absolute growth of €750,000,000 which is also quite significant and the highest number we have ever achieved. This also means we have significantly outgrown the fashion e commerce market growth by a factor of about 3, which means we continue to gain market share, which is in line with our long term strategy.
Now on the profitability side, despite these investments, we have achieved solid profitability at 3.6% adjusted EBIT. In 2014, as you will recall, our focus was on margin as we wanted to reach breakeven. And then actually, we have achieved not only breakeven but a very solid level of profitability. In 2015, we have kept this margin constant despite significant investments into our core business like the customer proposition and the long term strategic investments that we have started to do in our platform initiatives. And this is very much in line with the guidance that we have been giving at the beginning of 2015.
And then last but not least, free cash flow. We have been spot on with our goal to have neutral working capital at the end of the year, which brings us to operating cash flow of €119,000,000 And then we have invested €77,000,000 in CapEx and M and A, which results in a free cash flow of €43,000,000 which means that we are cash generating despite the very fast growth and the long term investments that we have been doing. On the second point, we have made customers happier than ever. And so we have continued to invest into our core business, improving our customer proposition significantly. We have actually driven up NPS by 10 points compared to 2014.
And those of you that work with NPS know that this is quite a significant improvement. And we have accomplished this by really working on the 4 key dimensions of our proposition. Starting with our assortments, we have seen very strong development in our special categories, which are kids, underwear, sports, the sports or women's sports, maternity, petite and plus size. We've talked about these projects throughout the year, and I think they make our assortment more complete, which customers like. We have onboarded 13 new partners and have joined our partner program, among them big names like Adidas, which allows for more availability on our side.
And we have onboarded 250 new brands in 2015, including very important accounts like Gap. On the mobile side, we have continued to work on this trend and clearly have the ambition and are leading in this trend. We have more than doubled our app download base to 16,000,000 in 2015, and we have continued to drive up our mobile traffic share to around 60% at the end of the year. Actually, around Christmas and some weeks, we saw mobile traffic share closer to 70%. So this has been a trend that is, of course, great for any e commerce company because customers can shop with us wherever they are.
On the convenience side, we've really made some efforts to boost the already very high level of convenience at Zalando. We have 12% less customer contact order, which indicates that our processes work even more seamlessly. We have cut the reimbursement time in half. So when customers return, they get their money back even faster, which is very important to them. We've started to pilot same day delivery, which is an exciting new product product to our customers.
And then on the brand side, we have been growing our brand value very significantly, which is also appreciated a lot by our customers. We have been launching joint campaigns with some iconic brands like Topshop and Calvin Klein. All of them have been received extremely positively. And this point around the joint campaigns directly brings me to the 3rd area where we have advanced in 20 15, which is around our brand relations and becoming the digital strategy for our brand partners with the co branded campaigns that we have done where we have now several big names that have approached us because they like the concept so much that they would like to realize something similar with us. And I think they will have some exciting news throughout the years.
We have, in Brand Solutions, scaled our offer in brand stores to our brand partners, which give them even more leeway to drive their own business on our platform. We have extended our partnerships, especially around the partner program, and we have started to pilot and now we'll start also to scale the advertising business, which has been gaining momentum, especially in the second half of twenty fifteen, running 25 campaigns overall and with also very good momentum in the Q1 of 2016. And then the 4th area I would like to speak about in terms of our achievements of 2015 is really how we have significantly expanded and invested into 2 key enablers for our future growth, being technology and also operations. In technology, we are doing a lot of work to extend our team to be able to invest more into the core of our business and the core functionalities of our business but also to continue to build the operating system for the fashion industry and to work on our platform initiatives. And we have scaled our team to around 1,000 tech employees, which means more than 50% growth in the team.
We have opened 2 international tech hubs, and we have done selective M and A deals to support this and to gain additional knowledge with Matrigo and Nager, which are both tech companies that work on online ads and Anna Twine, which is working to integrate brands into our platform. On the operations side, we have started actually to operate now our 1st satellite warehouse in Italy. It is already now processing around 25% of customer orders, which gives these customers the benefit of 1.5 days faster delivery. So this has been a very successful launch that was prepared in Q4 and now went successful launch that was prepared in Q4 and now went live in the 1st weeks of this year. We have completed several important cornerstones on the on our new logistics hub in Laar in Southwest Germany, which is planned to go live towards the end of this year with manual operations.
And we're actually accelerating our planning around the next big logistics hub, which is a result of the fast growth we have seen last year and our positive outlook on the next years. So this project, we intend to launch sooner than initially planned. So those were some of the highlights also from the operations side. Now let's look more into our financials, starting with our growth. I think these numbers very much speak for themselves.
We have shown growth of 34% in the full year, which means we have significantly accelerated our growth. And also in Q4, we have seen, I think, a very strong level of growth of more than 30%, which is particularly strong when you consider that this has been the quarter, actually one of the warmest Q4s ever recorded. So I think we can say that we did not really have a lot of support, let's say, from external conditions. And still, we have been able to grow at this very fast level. And when we look at the regions, I think DACH, I think it's a very strong result, both for the full year and the Q4.
When I look at Rest of Europe, I think it's actually a very strong result growing at more than 40% or more than 35% in Q4. So I think with these numbers, we can be only very happy. Now as always, what are the drivers behind this growth? You have seen this page now a number of times, and I think the picture remains very consistent. Also in Q4, the growth has been driven by a combination of factors around active customer growth and spending per active customer.
Our active customer base increased by 22% to now almost 18,000,000 active customers. In Q4 alone, we were able to add almost 800,000 active customers, which has been driven by a number of factors. For example, we see that a lot of new customers we can acquire through app downloads, which is great and which shows that our mobile strategy is paying off. But we also see a lot of success around improving reactivation and preventing churn, which is mainly driven by improving the customer experience overall and being more targeted in our outreach, how we reach customers and try to activate them. On the right hand side, you see the GMV per active customer, which is driven by an increase of average orders per active customer, actually going up by about 10% to new all time high of 3.1 orders per active customer, and the average basket size has been remaining stable year over year.
And here, I would like to comment that underlying this stable basket development, our focus on entry price points in our assortment, which has been driving a lot of the growth also on the active customer side, actually has led over time to a reduction of average value per item but an increase in number of items. And overall, these two effects cancel out and that we have constant baskets. Of course, this is something that puts logistics cost line because we have to do more work to ship one of those average baskets to our customers because they comprise of more items. But I think it has been a very good investment because it has allowed us to grow on the active customer side and to fuel our growth. So GMV per active customer has been increasing, which is a very important number as well.
So €222 per customer, I think that's quite a good trend that we are on. Now let's take a closer look at our margin. So despite the heavy investments we have made in growth and our long term initiatives, we have kept our margins stable at a very healthy level. So it's almost exactly where it was 1 year ago, which I have to say is a level that we feel quite good with and comfortable with. Specifically, in the Q4, we have achieved 8.3%, which is at the midpoint our guided range despite the adverse weather conditions that we have met in the quarter.
And so I think this is also something that is very promising. Compared to last year, the margin has been coming down slightly in the Q4. But I think when you look at these numbers, you also should consider that year in Q4, we were growing 20%. Now we are growing 30%. So I think when you put that into the equation, I think this year's Q4 has been economically more successful than last year.
We also show you the breakdown for the DACH region and Rest of Europe in terms of EBIT. The only comment I would like to make here is that West of Europe for the full year is very close, actually around breakeven. We have said before that I think in Rest of Europe, there are still many opportunities to drive growth. So I think if this became more negative again, if we see the opportunity to invest, I would not be overly concerned by it. But of it only makes sense if we also see opportunities to drive very good growth.
Now let's look at the development of the cost lines that are underlying our overall EBIT development. So first of all, I would like to clearly say that all cost lines came in according to our internal plan and are therefore also in line with the communicated implied guidance for the Q4. So I think it has been going very smoothly on the gross profit side. We see Q4 gross profit at target level, which is quite an achievement given the weather that we have faced. We have lost around 1 percentage point compared to last year, which is mainly due to FX effects.
So I think you will have this overall in the industry. It's around U. S. Dollar and also increasingly the pound, which has put some pressure on, I think, the gross profit line of many fashion companies, I think, were able to contain this effect quite well. And when you look at the full year, you actually still see a very significant improvement of almost 2 percentage points, which is, I think, one of the very positive developments of this year as the gross profit line for us is quite important.
And it brings us actually also quite close to the long term target level of 46% gross margin. Secondly, if you look at the fulfillment cost, I think this is the areas where you see most investments that we have made in 2015. So Q4 fulfillment costs are impacted by a ramp up. These investments, I'll name a few of them. The first one is just better service overall.
I've mentioned faster delivery and all the work that we do to extend our logistics network. This continues to be one of the most important NPS drivers. We have done a lot of work around entry price points. I've mentioned that we have more items on average in each basket, which also means we have more work to do in the logistics center. So this is a growth investment that actually goes into the fulfillment cost line.
And then also several initiatives that we do on the tax side that are accounted for in fulfillment cost. So for example, front end developers, all app developers, everything that we do around our operations platform and also beyond in terms of stock integration go into this cost line, and these initiatives have been ramping up in 2015. So of course, they see an increase in impact throughout the year. When you look at the increase of 3.3 percentage points in Q4, one thing that we would like to note is that we had in Q4 and of last year in the comparison period, the comparison is a bit skewed because we had positive onetime effects in Q4 2014. If you take these into account, it should not read 3.3% but 2.5 percentage points increase in fulfillment cost.
I would also like to comment here because this clearly was one important theme for the full year around payment And in Q4, we see no more impact from the invoice fraud we have seen in the first half of twenty fifteen. And I think here, we're also on track to reach our goals for the next year. Then we have marketing cost. We have actually been improving or continue to improve our marketing efficiency despite accelerated growth. And for the 4th quarter, The absolute level of spending was roughly constant compared to last year.
And also for the full year, we have seen very significant improvements. I think this is a very consistent trend that we will continue to see. And on admin and other costs, I think everything is fairly in line and no big updates on that side. One small side note I would like to make on a topic that is not on this page around deferred taxes. So as we have been profitable for the last 3 cumulated years, we now activated our tax loss carry forwards, which have led to a positive impact on our net income by €47,000,000,000 We have talked also in the past that at some point, this we will activate these carry forwards.
And yes, this has been executed now. And I think it's positive and gives us some opportunities in the next years. Now let's turn to the next slide around operational capital efficiency. So a quick update on the left hand You see that we are within our guidance with respect to net working capital, which has been neutral at year end. On the right hand side, you see our capital expenditure.
We have actually only spent €60,000,000 in CapEx this year, roughly half and half in intangibles and PP and E. Actually, €15,000,000 of planned spending were moved from Q4 into Q1. So this is only a shift. Of course, the projects, especially around warehouse extensions but also in terms around tech activation are still ongoing. So this is just a shift of CapEx.
Now if we turn to Page 13, you see some more details around our liquidity position. It increased by €50,000,000 to roughly €1,100,000,000 driven by a free cash flow of €57,000,000 in Q4. The cash and cash equivalents balance you see on the balance sheet stands around 9 €76,000,000 However, accounting for the investments into short term deposits of €155,000,000 our total liquidity stands at 1.1 €1,000,000,000 So with this, let's turn now to the outlook section. So with the page you see here, most of you will be familiar with it. It's one of our favorite pages.
I like it a lot because it shows that the biggest part of the opportunity is still ahead of us. So I look at this page every morning when I get up and I think, look, we are at the market share of not even 1% of the overall European fashion market. So there's still a lot of work to do. And I have commented before that we think this can be a 5% -plus market share company, which in this very fragmented market would be, of course, a huge competitive position. But we think it is achievable.
Why? Because we've already shown that we can do it. In the German shoe market, we already have a market share around 5 percent. So I think Online Fashion Europe is a super attractive category and a fun category, of course, to be in. I think our focus should therefore be to continue to grow our market share and to penetrate the market.
And this is why we continue to focus on the investment areas that we have. Now of course, I think one very important element of achieving such a high number is really the platform strategy that we have laid out, especially last year. So I think in order to get there, in order to achieve such a high market share ambition, we need to do 3 things. First of all, we need to continue to grow our existing core, which is our wholesale business and to continue to evolve our customer proposition. Secondly, we need to tap into additional business pillars like our partner program, offline integration and all modes that give the brands and our brand partners more leeway to manage their own business on our platform, which gives us, of course, also the opportunity to leverage their ability to invest and their ability to manage growth and which should, I think, unleash additional growth dynamics.
And then thirdly, around launching additional services like advertising services that we have discussed, fulfillment by Telando services, styling advice, citing many additional opportunities that we can build on top. And I think in order to get to such a high ambition as 5%, I think it's quite clear that we have to put a high emphasis as a company to make sure that we are more than a retailer, that we grow beyond wholesale and that we tap into these opportunities that are especially driven by the investments that we're currently making on the tech side. I think it's very important to point out that this is a multiyear effort. Yes, so in 2015, after the IPO, we have said now that we have taken the company public, now that we have raised all this money, what do we do with it, where do we want to invest it. And we have said this is our strategic focus to continue to be focused on market share gains and to lay the foundation really for a platform that goes significantly beyond wholesale.
And I think we have now a couple of years ahead where we will continue to build on the strategy, which means improving the core and making the core more flexible, but also to launch speedboats and develop new ways to connect fashion with people or brands with customers and to see really which one of these pays off. And I think it will take a couple of years before we really then see the impact, which I think can come from additional growth. I think it also can come from additional margin opportunities as many of these new initiatives that we are launching are really sort of at their heart tech products, which we believe should have a very attractive margin profile. I think some of these some example of these pilots and speedboats we have already started are set in mass or advertising, which I already mentioned, are the law. And I think also on those areas, we will see we've piloted them in 2015.
We'll scale them over the next years. And then we expect to see impact at scale from them in the years to come. Now of course, the big question is what does this mean for our numbers, and this brings me now to our multiyear outlook and guidance for 2016. So we continue to focus on 3 key financial dimensions: revenue growth, profitability and free cash flow. Our multiyear perspective, which you see on the left hand side, remains unchanged.
So we continue to believe in a long term growth corridor of 20% to 25%, which actually means that we will double the company roughly every 3 years. And we believe that we can achieve this with solid profitability and free cash flow that is defined by neutral working capital at year end and strategic CapEx spending. Our 2016 guidance is a derivation of this long term guidance. You see it on the right hand side. So as we continue to see strong growth opportunities, we expect revenue growth at the upper end of our target range of 20% to 25%.
Based on this growth profile, we expect adjusted EBIT margin to come in around 3% to 4.5%. Our working capital assumption is unchanged. CapEx will be around €200,000,000 And now we would actually like to spend some time to talk in more detail about each one of those three dimensions. So starting with revenue growth at the upper end of the target corridor of 20% to 25%. First of all, I would like to point out that we think this remains to be an ambitious growth guidance and ambitious growth picture.
I think it's very hard to find another company that is growing 25% at a scale of €3,000,000,000 I think it's probably almost impossible to find it in Europe. I think there are also very few companies globally that are growing at such combination of scale and pace. I think in absolute terms, it means that we will be adding a very similar amount to what we added in 2015 to our top line. And I think 2015 was a very successful year in terms of growth. And it is by far the fastest growth that we see in the industry and also in our direct competitive landscape.
It also means we would continue to outgrow the market by of 2% to 3%, assuming that the market is growing something around 10%. By market here, I mean the online fashion market. Key drivers for this growth will continue to be investments into our core, into our customer experience around the areas that I have mentioned before, assortment, mobile, convenience and brand. And you'll also see the platform initiatives that we have launched with early small contributions such as ZMS, such as Sanon and such as offline integration. Now if we turn to EBIT.
So our margin corridor of 3% to 4.5%, you will notice that the level of margin that we had in the last 2 years is roughly in the middle of this corridor. We think there is a floor at 3%. So we've clearly said that we want to grow under the condition of solid profitability, and that, to us, means a level of 3% plus. But I think there's also a ceiling to it at 4.5% because we'll continue to reinvest into our long term growth. Customer proposition and platform initiatives, as we mentioned, to also make sure that we can sustain the 20% to 25% growth corridor for a longer time period.
Of course, underlying these trends, operating leverage doesn't stop but continues. So I think on this side, there's always one very valid question that you will have, which is how much are we really investing and into what. So we thought on that occasion, let's do a little thought experiment. So what would happen if we decided that we do not want to grow actually and capture market share, that we do not want to grow 20% to 25% in the long term, but that we are fine to grow with the market at 10% or maybe 15%. And thus, we have significantly less need to invest in 2016.
So as I mentioned, there are 2 main investment areas. 1 is our customer proposition and the other one, our long term strategic platform initiatives. So on the first one, the core of our business, we are improving the customer proposition to keep our growth at the target corridor for the next years to come. And we estimate that our investments in this area are around 2 to 3 percentage points of margin in 2016. When we go through the different areas, I think there's a number of examples how we would act differently if we said to grow with the market is enough.
So if we first of all look at the assortment, we would not need to focus so much on entry price points and fast fashion because we would not need this additional growth potential. So this would actually reduce our would improve our cost of sales and would actually also reduce the items per order. We would probably start to increase prices on private labels because we have priced them quite aggressively also to foster growth. So this also, we wouldn't need. And we will focus our buying team solely on terms negotiation and not hunting new brands.
So I think there are many, many topics around the assortment that we could see quite differently if we were not geared for growth. I think on the mobile side, if we were fine to just grow with the market, we would not to be need to be leading in mobile, which means we could rely only on organic downloads, and we would not need to invest into paid downloads so significantly as we have done in the past, which is a double digit €1,000,000 amount that we are investing per year. In terms of convenience, we would not have to invest into same day pilots, we would not have to reduce reimbursement time, we would not have to invest into better customer care. We would not invest into our hub and spoke system. We probably also wouldn't need the local facility in Italy, which, of course, also adds, to some extent, complexity and cost.
And we would put significantly less effort into ramping our facilities up and just focus on gearing them on efficiency. And then on the brand side, I think this is where we have like the most direct relationship. We currently still have a quite significant level of marketing spending. In 2016, we'll be spending something around €400,000,000 in brand marketing and performance marketing. And if we say 10% to 15% growth is enough, then we could we would not need to invest in building an even stronger brand, and we also wouldn't have to invest into acquiring new customers.
So if we decided tomorrow 10% growth is enough, I think the day after tomorrow, I would probably cut something like SEK 100,000,000 from our marketing budget, which next year directly would translate into more than 2% margin impact. So I think that shows that the 2% to 3% that we invest in the core business in order to continue to grow fast is a quite modest assumption. Now second investment area, as you know, is our strategic platform initiatives. We are extending our business model beyond wholesale for the reasons that I've just explained earlier. And we estimate our investments in this area to be around 2% margin in 2016.
Activities in this area include to do more for the customer, like ramping up new businesses like Zalon. And it also includes to do more for our brand partners, ramping up businesses like ZMS or the integration of offline stores, which is a very promising journey but also very tedious work to do. It also includes extending our brand solution systems, which allows brands to hook up more easily to our system and to do business with us. We would probably significantly reduce our investments in R and D, which includes data, advanced analytics, personalization. And we would in these investments, you should remember that they are that they have been back end loaded in 2015.
And therefore, in 2016, we start from a higher basis and thus have the impact for the full year. Of course, these initiatives on the platform side, what they do is they cost money currently, but we think that they do not only generate growth opportunities, but they also generate opportunities as an option to aim for a higher target EBIT margin target as they are mainly centered around tech and therefore should deliver a very effective margin profile in the future. So in the core, we are investing something like 2% to 3%. In the platform topics, we are investing something around 2%. I think that gives you a good feeling of what magnitude of investments we are talking about.
Of course, all of these are rough estimates, and it's difficult to pin them down specifically. But we believe that they are directionally right. And you also see that we have a lot of discretion around these investments. I think most clearly, it is on the marketing cost that we incur. So if we choose not to make them, we marketing cost that we incur.
So if we choose not to make them, we could achieve a significantly higher margin very quickly but at the expense of significantly lower growth over the next years. However, as I mentioned in the beginning, this is like a hypothetical thought experiment, yes? So you can wake up now again from the dream of fast margin expansion because as we said, we think long term, the best strategy to generate value for our company is to actually invest this money into faster growth to continue to outgrow the market and to continue to build a leading position. So the last piece of the guidance I would like to comment on is free cash flow. So the first area here is roughly neutral net working capital at year end, which will remain as it has been before.
On the CapEx side, we mentioned a level of around €200,000,000 and it breaks down as follows. I mentioned already €50,000,000 in shift from 2015 to 2016. Secondly, we will continue the build out of Manchin, Rabach and La, which sums up to around €100,000,000 This is CapEx that was already planned and that we execute as planned. And then we have on top of that accelerated build out of our next logistics center and capitalization of additional software investments, which then brings us to a level of around €200,000,000 that we expect for the full year. Think all of these activities very clearly will help us to deliver on our long term growth ambition.
So if we conclude on our guidance for 2016, I think we'll continue to follow our DNA as a growth company, and we are clearly committed to profitable growth. But if in doubt, rather focusing on growth and market share gains than on increasing margins. One quick comment I would like to make on the seasonalities. When you look in more detail at the quarters and how to date them out for 2016. Q1 and Q3 tend to be weaker quarters as they represent the sale quarters for fallwinter and springsummer inventory.
And Q2 and Q4 are generally stronger, and they are full price quarters. In general, fallwinter quarters tend to be stronger than springsummer quarters. So for example, Q1 tends to be stronger than Q3, and Q4 tends to be stronger than Q2 due to winter items generally carrying a higher item value. One specific topic regarding Q1. So when you think about 2016, we would ask you to consider the seasonality and also to be in mind when thinking specifically around Q1 that in 2015, the investments we did were ramping up throughout the year, and thus, they were back end loaded.
And secondly, to consider that in the first half of last year, we had the topic around payment, where around €90,000,000 of costs were related to Q1 but booked in Q2. So with that, we conclude on the outlook. And before we jump into Q and A, there's one small comment I would like to make on one additional press release that we published this morning around our supervisory board. So yesterday, in the supervisory board meeting, it was discussed that Christina Stenbeck intends to leave the Supervisory Board as of this summer. I think in general, she intended to do this role for a certain period of time with the goal to bring the company through the IPO and to establish it as a leading listed company, which clearly we have, I think, achieved over the last years.
And she also feels that she has found the right person to hand over to, which is Lotta Lance. He has been on our board for 2 years. We know him very well. He is an independent candidate, which I think is strong for the company. He is an expert in media and digital and also German corporate governance, So a very strong candidate to take over this role, and we have been working very good together over the last years.
And this will also be the case for the years to come. And the empty seat will be filled by Jorg Lindemann, who is the CEO of MTG. And Kristina will want to focus more on our role as an owner and more on our role in Kinnevik. Of course, we'll continue to be in close contact with her as we have been over the last years, last 6 years since they first invested into the company. And yes, with that, let's move into Q and
The first question comes from Mr. Volker Bosse, Baader Bank. Please go ahead, sir.
Yes. Volker Bosse, Baader Bank. I would like to start with your fulfillment center in Italy. You mentioned a good start here. So what's your experience?
Does it make sense to open up more of these kind of satellite fulfillment centers in order to come closer to your regional customers? How do you think about that? Same would be on your recently launched Zipcard app, which is offering same day delivery. How was the start and the acceptance of the customers? Is it possible are you able to roll out this to further cities?
Or how is your understanding here? And 3rd, I would be curious to get a trading update into how was your start into January, February in the light of the unfavorable adverse weather conditions in the 1st 2 months in Europe? And perhaps finally, on your private label, also knowing it's not your strategic focus, but perhaps an update, what's your private label share and growth currently?
Yes. Thank you for your questions. So on the first question, the fulfillment center in Italy. So yes, it was a very successful start, and we are eager to see the feedback from the Italian customers. But from all the KPIs that we see, it's going really well.
I think we'll need this springsummer season to really find out for ourselves how can we really fine tune it operationally, what is the long term impact on customer lifetime value. And from that, I think we can make a conclusion then if we want to move to launch more satellite warehouses. So I think that's a decision that we will probably take sometime this summer. As we have said before, I think there are several markets where this where we have this potential to build such a local warehouse to boost local customer experience. Obviously, one other tool that we will also use more and more strategically is the opportunity to use the Partner Program, especially for brands that have local fulfillment centers.
So if you have, for example, a brand from a certain country, they typically have their fulfillment network in this specific country, which we could leverage then quite well. On your second question with respect to Zipkart, so as you rightly pointed out, this is a pilot to see how customers react to it. In parallel, we're actually piloting silent upgrades to same day delivery in our core product, Zalando, which where the customer feedback has been very positive. Also here, we are monitoring what the impact is on lifetime value and retention rates and then could move, hopefully, also some time this year to make it available as one of the delivery options in, for example, the checkout of the fashion store but also to our of the Zalando fashion store but also to use it for other products. Then the 3rd topic, trading.
So I think it is too early to give really an outlook for the springsummer season since it is just starting. We started this weekend to roll out our new campaign. What I can say is that we are happy with the sell through that we have achieved for the fallwinter season. So despite the fallwinter season being difficult in terms of temperatures, I think the flexibility that we have now in how we manage our merchandise has allowed us to come to, I think, a very positive picture on the sell through rate. So I think our focus is now entirely on ramping up for the new season.
And then on your last question, private labels, there remain to be a double digit share of our business. They continue to develop positively. And I think, in general, our approach towards private label and how we position them on Zalando has not changed. In our view, they are competing with the party brands because we want to be the platform for the entire fashion universe, not just for private labels. And we continue to believe that this is the best strategy both to drive growth economically for us but also for our customers to find the best products.
The next question comes from Jamie Merriman.
It's Jamie Merriman from Bernstein. I have two questions. I was wondering just in terms of the sort of speedboat that you're trialing in the platform approach. Can you just talk about how externally we should think about trying to follow progress on some of those and how internally you're measuring progress? And then the second one is, with respect to the fulfillment costs, obviously, given all the improvements that you're making in the offer and delivery prospects, well above your sort of long term target of 20% of sales.
So I'm just wondering how you're thinking about that long term target and where within that the leverage is possible? Thanks.
Sure. So on the first question around the speedboats, so on these examples like like offline integration or Zalenor, how do we follow this progress? So I think, externally, we will, of course, give updates from time to time. We will also have more detail on some of these initiatives on the Capital Markets Day that is coming up later in March. However, I think for also quite a while as these initiatives are ramping up, I think we'll not break them out in great detail because I think these are still very early initiatives, and we also want to give them time to develop.
I think internally, of course, in this situation, what you always have to manage is the trade off between giving these young initiatives time to develop but then also to be very transparent and very honest with ourselves how they are performing. And I think we have we want we believe very much in these initiatives, and we will give them room to develop. But we have also shown in the past where we launched different new initiatives that if some of them do not work out, we will also react to it accordingly. But I think especially when we talk about topics like offline integration, so really making sure that we can hook up offline stores into our system and make that inventory shoppable online. That is really a project that cannot be judged, I think, on a quarterly basis.
I think this really has to be judged with a more long term view in mind. On your second question on fulfillment cost, I think that is a very valid point that you bring up. I think, of course, one effect is that in 2015, we had indeed this unfortunate issue around payment cost, which, of course, in our long term target model, we don't see to be an issue. And I think we also have some levers still to also work on efficiency and fulfillment. We just have chosen to now really put the focus on improving the service to the customer.
But I think long term, our target margin model remains unchanged in that sense that we still believe in the 10%. However, what we might see is shifts among the cost lines. So when we look at the numbers, how they're currently developing, I think that with the marketing leverage, it is quite clear that very soon we will be around the 10% that we have laid out in the target margin model, but I don't think that we will then stay at 10%. So there actually, I see opportunity to operate at lower levels long term. In fulfillment costs, it may be that we are operating at slightly higher levels because as we see it right now, we think that the investment on the operations side has a better long term payoff than the investments on the marketing side.
So you might see shifts among the cost lines depending on where we think the next euro is invested best.
The next question comes from Richard Jen, Bank of America.
Yes, hi. Thanks for my questions.
A couple of questions. First of all, on gross margin, there remains a 600 basis points price differential between rest of Europe and tax season. Just wanted to understand how can you close that gap in the long term or in the near term? And second question on the gross margin itself is on the 4th Q, just want to understand how much was it was promotion related, the decline in the gross margin? And at what levels are you hedged currently?
And the third question, just want to understand your EBIT margin guidance is pretty wide. What are your assumptions at the lower end at 3% that might drive the margin to actually low level? Thanks.
So in terms of the difference between gross margin between Rest of Europe and DACH. I think, of course, all the markets, as you always said, operate at different levels and different cost lines, yes? So some markets tend to be very efficient in marketing, and you can acquire customers at very attractive costs. In other markets, you have to use more discounts. In other markets, more vouchers.
In some markets, they have low return rates, so the fulfillment costs are cheaper and so forth and so forth. So I think there are several differences across the cost lines. We are not particularly eager to have every cost line being consistent across the countries as long as below the line, they have a consistent outlook of coming over time, has the potential to come to our target margin picture, Yes, so I think there, we are flexible and have to accept that markets work differently. And so markets also may have different gross margins. On your second question, I think Q4 2015, of course, we had slightly higher promotional activities than planned, but this was really only a fraction of a percentage point impact.
So really, the majority of the gross margin topic in Q4 was FX related, but there was some increased promotional activity but really, I think, very low compared to the seasonality effects that we have seen. And on your third question, yes, the margin guidance may be wide, although I would like to point out that I think in such a fast growth environment, of course, it's also a bit more difficult to forecast margin precisely. That we can also invest a little bit more. Or if we see there are opportunities to come up that we can also invest a little bit more. Or if we see there are opportunities to become more efficient, of course, we'll also work on those.
So I think there should be some leeway to manage the margin in this corridor and to have leeway to execute on any opportunities that might come up.
The next question comes from Mr. Markus Strauss.
Two questions for me. 1 on marketing expense, so it's down 11.7%. Can you speak a little bit here about how you think about the split between your traditional and the digital marketing budget allocation and especially app installs? And further with 60% of visits in Q4 or 70% that you said around Christmas coming from a mobile now. I know you are not speaking about the revenue split here, but how much is of that is actually in app versus mobile web?
And by the €60,000,000 download number you gave us for app and stores, how is the engagement of users coming through the app versus mobile and desktop? And the second, quickly follow-up on what you said about the Italy fulfillment center. Is it fair to assume here that like the out like outsourced centers like this should be positive for fulfillment as
slightly? Yes. So maybe just to start with the 3rd point on Italy. I think there are different effects that we have. I think one is that, of course, when you only work with central hubs, you have a more efficient allocation of inventory and you can use more automation, which we are not using in a comparably smaller satellite like in Italy.
On the other hand, you also save cost on the last mile delivery. I think we'll need to see how this plays out exactly throughout the season. I think this is precisely one of the learnings that we want to make. But I think it definitely sort of causes also internal resources to plan and to do it that otherwise could be working on efficiency projects. So I think it is an investment, but it also can generate some savings.
On the other topics, marketing spend. So we don't break out specifically how much of this we invest into mobile or specifically into app. However, app investment has been increasing significantly last year. But it is geared ultimately in a very similar logic to how we steer performance marketing, right? So in performance marketing, you also look at what is the pay off of one additional customer that you acquire relative to the cost that you incur in mobile apps or similar.
It is the question what is the cost of one additional download and what's then the economic benefit that you get from it. In terms of visit share, yes, we have been at 60% visits from mobile, where a large portion is still coming from the app sites. But an increasing portion and actually the fastest increasing portion is coming from the apps. And what we also see is that sales are growing significantly like sales from mobile are growing significantly faster than visits from mobile. In terms of engagement, yes, of course, we track engagement quite closely because it ultimately determines what is the economic payoff that we get from an app download.
So it's also considered when we see our app spending, and we see that actually, app customers have the highest level of engagement by far from any of any customer group.
The next question comes from Ben Homen.
Three questions from me. First of all, on the DAC region, could you tell us what marketing costs are in the DAC region? It was impressive growth. I just wanted to know whether you've been able to bring the marketing costs below 10% there. And then secondly, specifically on the non operating OpEx for next year, can you give any idea on the preopening OpEx associated with the new office and the new DC?
And then finally, on the DCs, could you give us an update on what the capacities are of the 2 DCs that opened the one that you just started and the 4th that you're talking about? And has there been any change due to the reduction in average selling prices that you've talked about?
Sure. So on the DACH region, we do not break out the specific P and Ls in detail, as you know. But for the DACH region, in terms of marketing costs, we are actually operating at the level of our target model. So as DACH is the most mature region, it's also more advanced, of course, in bringing down marketing as a percent of sales. On your second question, in terms of the additional DCs.
So clearly, in the second half I think in the first half, we will see an impact here from the Italy satellite. But of course, this is relatively small impact. In the second half, we will see an OpEx impact from ramping up our new facility in La, which firstly will be manual processing. So there, we will see some more impact from this ramp up. On the capacity of the new disease, so we have commented before that including the facility in La, we would have a revenue potential of €5,500,000,000 once it is at full capacity.
And now as we're discussing to kick off yet the next large facility, we think this next large facility roughly would be at volumes comparable to Erfurt, Merschinenlachtbach and La. So it is roughly an increase in our capacity of 25% to 30%.
The next question comes from Christian Schwenkenbacher, Hakon Daufel.
Yes. Hello, and good morning, everyone. Just three ones from my side as well. The first one, very broadly on the selling trends, which you have experienced in the Q4? And maybe you could give a comment on which styles and products have sold exceptionally well?
And the second one on private label. And here, I would be interested if you could share some of your thinking in terms of how you like to drive this category strategically going forward. And that would mean driving it organically or looking for basically inorganic ways to boost the shares of private label of your business? And then thirdly, on the logistic costs, and I would be interested if you could provide a split of, let's say, those markets that operate with an optimized supply chain and those which are currently not catered by satellite warehouses and so forth? And maybe just lastly, just a broad comment on discounting in the 4th quarter.
It seems that you have got around in the Q4 quite well. So if you would be so kind to make a comment on how that was actually performed, in season shares and so on and so forth? That would be very interesting. Thank you very much.
Sure. So on your first question in terms of what styles and products have been selling particularly well. I think overall, sports continues to be a very important theme. So all the sports brands and sports fashion brands have been performing quite well. I think all of our large accounts have been performing positively.
The special categories, especially underwear, of course, has been performing very good where we had the Calvin Klein campaign, but also kids has been performing very positively. And you will see also from the campaigns that we launched last weekend that the whole topic around sports and activity will also be one of the key elements that we communicate around for the upcoming season. Secondly, on private label, our focus is clearly to grow this organically. We don't have currently any plans for inorganic private label growth. I think on inorganic growth, we're really focusing on capabilities in the technology area and 16.
On your third question on logistics costs, this is really something that is very difficult to say because as you will recall also from our IPO presentations, the majority of our volumes really filled from 1 centralized footprint. And this footprint is serving all of the markets. It's now a first addition that we have one specific warehouse for Italy, which is, as we said, a pilot. So ultimately, all markets are working from the same supply chain. Of course, some markets, it's more difficult like Finland because you have, of course, from our centralized footprint, high Alaska cost to get a parcel to Finland, then you would have to get the parcel to, let's say, Munich.
And then on the 4th topic, discounting. As we mentioned, this had did not have a material impact in the Q4. We had a fairly high share of in season buying, which was at the levels that we had targeted of about 20% to 25%. So there is no major change there, but we see that the changes that we implemented after 2013 continue to pay off.
The next question comes from Michelle Wilson, Berenberg. Just a question on the adjusted EBIT margin that you reported this morning. Are you able to give us that if we exclude the forward impact in there?
Yes. I'll hand this question to you, Jens. Sure. So the fraud impact for the full year 2015 is roughly 1%, a bit above 1%.
The next question comes from Charlie Muir Sands, Deutsche Bank.
Yes. Good morning. My first question is about your revenue guidance of the upper end of the corridor of 20% to 25%. I understand why you would make reference to that corridor. But is there any reason why you foresee not achieving something ahead of the 25% given the strong metrics around customers and so forth?
And then secondly, on the gross margin pressure you cited in the first in the Q4 from currency, should we be thinking about a similar quantum still to wash through in at least the first half of the upcoming year? And then finally, just in terms of CapEx, you've obviously got a budget to significantly increase your capital expenditure in 2016. Would you see that €200,000,000 budget as unusually high as a percentage of sales or a higher ongoing cost of expansion?
So let me take the first question on revenue guidance. So I think the reason why we make reference to this corridor is because we fundamentally think it's a very good corridor. And it's we assume the IPO we want to be operating in this corridor for the next years to come. We have been successful in doing that in 2014. We have been super successful to really outperform it in 2015.
And we think our target should be to be in this corridor, and I think we can be at the high end in 2016. And I think this is a very consistent story, and we think to target for this corridor has also a lot of benefits for us operationally because it still leaves us a lot of flexibility if the season goes well to accelerate beyond it or if the season does not go so well and not to run into any gross margin pressure. And I think we have actually seen both happening this year. And last year, we have seen how we all performed in the springsummer season because there was the opportunity, and we saw how we can deal with the difficult season in the second half of the year. So this is why we guide at the high end of this corridor.
But of course, like we said last year, if there's the opportunity to outperform it, we are happy to do it. I just think in terms of a long term ambition, think the level of 20% to 25% already is quite ambitious. And I think we should not overdo it and lock ourselves into a growth ambition that might be too high and then lead to adverse effects in terms of gross margin volatility or the like. And then for the second and third question, I would like to hand over to Jan. Yes.
First, talking about the FX effect. I mean, as Ruben pointed out, yes, we've seen some impact from U. S. Dollar and British pound in Q4. And as we pointed out during the last earnings calls, we have I mean, where possible, we hedge against currency fluctuations.
But obviously, we cannot decouple entirely from market developments. So things we've seen in Q4, if the trends on the currency develop as they developed over the last year, we might also see some effect in the gross margins coming up. With regards to CapEx, yes, the number you see we guide towards in 2016 with the roughly CHF 200,000,000 is also compared to the numbers you've seen in the past quite high. And that is something where we feel comfortable with to invest now in the initiatives Ruben pointed out. I guess, from the medium- and longer term, we should see some of the trend towards the 2% to 3% we also pointed out in the past.
The next question comes from Graeme Renwick, Exane.
Just two questions for me. Firstly, on the Partner Program where you've added 30 brands in a year, what percentage of revenue does this now represent? And are you able to give a bit more detail on the economics of this commission based model? And also, what are your current learnings and any partner feedback you have so far? And secondly, you mentioned a campaign of reactivating customers to reduce churn.
Can you talk about what initiatives this has involved? And can you give us any sense of the scale of reductions to churn? And also, what does the cost of reactivating a customer compare to those involved in acquiring a new customer?
Yes, sure. And from what I see, actually, we have still a long line of questions. So I think we will I'm sorry, but we'll probably focus a bit on shorter answers to make sure that we can cover all of your questions. On the Partner Program, the share continues to be single digit, but it is growing, and we have the intention to grow it also in the coming year. The feedback that we get from partners is quite positive.
The feedback that we get from customers is also quite positive because it increases the broadness of our assortment even though partners typically don't deliver the same level of convenience that we are able to deliver. But still customers like the increased selection. On your second topic, on the reactivation. So I think reactivation, we've been doing work around this for the last years. I just think in 2015, we have become a lot better in targeting it.
We cannot comment on like specific KPIs of these campaigns, but I think you can see from the active customer development that they are quite favorable. And of course, it is in general, it is cheaper to reactivate a customer that you already had than to acquire a completely new customer.
The next question comes from Simon Irwin, Credit Suisse.
Three quick ones for you. Firstly, can you just talk us through the kind of cost as we go through the year? Obviously, as we get into the second half, you start annualizing last year's cost ramp. But obviously, we've got new infrastructure coming on stream, etcetera. So is there going to be any fading in or phasing in the increase in costs as we go through the year?
Thirdly, can you secondly, can you just talk a little bit about the new DC in particular? Is it definitely going to be in Germany? Or are you thinking that there are possibilities outside? And third, can you just give us a kind of verbal comment in terms of trends on either churn rates and also return rates?
So I think on your first question in terms of phasing. So last year was clearly back end loaded as we just started to ramp up really our investments actually in or after Q1. I think you will also see, of course, some ramp up effects this year, but it will not be as pronounced as it was last year. On your second question with the new DC, I think it could be in Germany, but we are also definitely looking at locations outside of Germany because the footprint that we have so far is very centralized, which has worked well. But we are catering all of Europe.
I don't see why 100% of our logistics facility would need to be in Germany. But we will give you an update once we have a clearer picture on this. And then on the third question around return rates and churn rates. So return rates have remained fairly constant. And churn rates, as you can see also in our customer development, we have seen some favorable trends, especially in the second half of the year.
But of course, churn rates also tend to be a KPI that moves fairly slowly, so I wouldn't call these changes dramatic. But I think they are on the positive side, which, of course, is very encouraging because I think it speaks to the effects of our customer selection initiatives.
The next question comes from Jurgen Klopp, Kepler Cheuvreux.
Three quick ones. First of all, on your bread and butter event in September, does that consume additional marketing expenses there? Or will that rather be a shift of the existing marketing budget? Secondly, on the new DC again, sorry, the automation level that you have already achieved or the increased automation level, is there or could you talk about that, what that means in terms of for the new DC, how much more automation achieve in the new one? And the last one, I appreciate your comments on that some of the cost lines might shift going forward in terms of marketing and fulfillment.
And on the gross margin side, you stick continue to stick to the 46% as your target. Is there anything you see that could maybe move the needle a little bit upwards on the gross margin side as well? On your first question with respect to bread and butter, so yes, we will take sort of the cost that we have for marketing of this event from our originally planned budget. But then on the other hand, I think the event is not so large that it's moved the needle on our overall budget, but the plan is to finance it from the existing planned budget. On the second question in terms of automation levels, so we have increased step by step the automation level.
Erfurt, like if we start even earlier, Brieselang has the lowest level of automation than Erfurt has already more. And Munchenbach has again more with the back sorter. And La is the most automated facility, which also makes sense because La is in a region where we have comparably high labor costs. So the payoff of these automation systems is also more is also faster. And I think for the next facility, we will really decide, depending on precise location and other parameters, what level of automation we build into that next facility.
And then on the 3rd topic, target margins on the gross margin, I think we roughly stay where we are. We have seen in 2015 that we have moved very much into the direction of the target margin. I think there's still room for improvement, but I also think there's not like room to do something dramatically different unless, of course, the partner program and these elements become a larger and larger part of our business. There, of course, you have significantly better gross margin dynamics. So keep in mind that the target margin that we talk about is really centered around our current core business.
The two last questions. The next one comes from Magnus Roman, Handelsbanken.
Three quick ones. You made an example here of the margin impact if you would settle with growth rates in line with the market. Did you refer to the online fashion market there or the overall market? Number 2, do you care to mention the actual number for your Net Promoter Score
in order for us to have
a view of how you compare to peers? And then just coming back again to the planned 4th Hub, could you mention here full automation of the picking process could be an option for
you? Sure. So on the first question, yes, this thought exercise of the margin impact, if we would move to market growth, clearly was meant if we move to online market growth, which is probably around 10%. So I think for us, it would maybe be 10% to 15% because I think we have the benefit of having a well known brand and the like. But significantly, of course, above the overall fashion market growth.
On your second question with respect to NPS, so we have so far not communicated NPS numbers because we have made the experience also when we ourselves benchmark us against other companies that it is very difficult to do because the ways of measuring NPS are extremely different across companies. So it's really a question when do you measure it in the customer journey? Do you measure it in the checkout? Do you measure it after all the processes have been handled and after returns have been handled? How exactly do you do the questionnaire?
And then there's also big cultural differences. So we see also for ourselves that there are huge gaps between different markets, which is culture related. So I think it's really difficult to compare NPS across countries or across companies, which is also why we internally look very much really on the change in NPS, not so much on the absolute levels. And then the 3rd comment is with respect to the 4th hub. I think full automation I mean, really, full automation, I think, is unlikely because it leads to very high CapEx and it leads to very low flexibility for the long term.
So I think it's unlikely. But as I mentioned, give us some time to really work on location and how it all should work out. We just wanted to give you an early heads up that we are planning with a bit higher CapEx numbers because also because we think we want to accelerate this project.
The last question comes from Mr. Cochrane, UBS.
I'll make this quick one.
In terms of your EBIT margin guidance and the range and your sales corridor, if the opportunities were available and you could increase the sales above the corridor, would that imply that the EBIT margin would be at the lower end of guidance? Is there a sort of direct correlation between your sales growth going slightly higher and your EBIT margin coming within
the lower end of your band?
Yes. So I think that's a very fair and very good question. So of course, we have this also this band in terms of EBIT margin in order to be able to steer it. And as I mentioned, if there are additional investment opportunities, we might take them, which would then lead us to be in the lower end of the margin and have higher growth instead. On the other hand, when you look at last year, we also there were able to actually outperform our growth corridor very significantly and to keep our margins stable at the same time.
So I think this is also really a result on how does the season go, what is really the driver of growth, I mean, because there are also ideally growth drivers that don't cost you margin, right? So if you just even better brands and or if brands do a great job to work together with us, we can also maybe foster growth without investing even more margins. So I think difficult. It's not like in the automatism that if growth is higher, margin is lower. Or if margin is lower, growth is necessarily higher because we could also find investments that are more long term that don't kick in this year but will come in over the next years.
So I think it's difficult to draw a very direct short term correlation. Although in principle, I think you're right, if we increase our investments, chances increase that growth will actually accelerate.
Thank you. This concludes our Q and A session, and I hand back to Ms. Opp.
Thank you all for joining today. We really appreciate your interest in Zalando and look forward to seeing you at our Annual Capital Markets Day here in Berlin on March 22 and on March 23 at our warehouse in Erfod. We will send out the agenda later today and you will also be able to download it from our website. Afterwards, the next touch point will be Q1 2016 trading update. And as you know, we will schedule it ahead of the earnings release and we'll let you know via press release when
the actual date will be.
Afterwards, Q1 earnings call is scheduled for May 12, 2016. So thanks again and looking forward to touching base then.