Zalando has reported a rise in revenues and fall in profits as it unveiled plans to roll out a beauty offer and accompanying concept store next year.

The German fashion etailer posted its preliminary third-quarter results, which reported a rise in revenues during the period between 27.5% and 29.5% of approximately €1bn (£890m).

The online marketplace’s adjusted earnings before interest and tax are expected to fall between a loss of €5m (£4.5m) and profit of €5m, tumbling from a profit of €20m (£17.8m) during the same period last year.

Zalando’s profit margin also plunged to between -0.5% and 0.5%, down from 2.3% the previous year.

The German etailer, which has rolled out an AI-powered gifting chatbot, a fashion start-up acceleration platform and membership scheme in recent months, attributed its fall in profits and profit margin to an ongoing investment drive.

The retailer also unveiled plans to enter the beauty market early next year.

Zalando will sell products across cosmetics, skincare and fragrance categories and also plans to launch a beauty concept store in Berlin that will offer tutorials as well as host product launches and events.

The retailer will initially launch its beauty offer in Germany and later roll it out to more international markets.

Co-chief executive Rubin Ritter said: “We continue to push forward with our growth strategy at full speed, winning market share.

“Our results for the third quarter underline once again that our strong business expansion is driven by ongoing investments into our technology and logistics infrastructure, brand partner proposition and consumer experience.

“The expansion into the beauty market is a natural next step and reflects the demand of our customers.”