Zalando goes into the purple

Berlin-based online fashion retailer Zalando SE suffered an expected decline at the start of fiscal year 2022. In the first quarter, sales of a company accustomed to growth were below previous year’s levels. According to a report released Thursday, the e-commerce expert fell into the red.

In the period from January to March, the group’s sales amounted to slightly less than 2.21 billion euros, 1.5 percent below the level from the same quarter last year. For Zalando, this is the first drop in the company’s history. The reporting period was “characterized by macroeconomic impacts”, according to the company. “Rising inflation and rising costs for private households” would make buyers no longer want to buy. Furthermore, the “gradual alleviation of the changing pandemic environment” has led to changes in consumer preferences, in other words: people have gone for products other than those previously in demand. Consumers are again “increasingly interested in seasonal innovations and the latest trends,” the company explains.

The quarterly loss is about 61 million euros

In contrast, Zalando slightly increased its gross goods volume (GMV) by 1.0 percent to 3.18 billion euros. According to the company, this is due to the “strong growth of partner activities”, whose share in the total GMV of the online platform rose to 32 percent. Zalando is on track to achieve the set goal: “to achieve a 50 percent share in the gross quantity of goods in Zalando stores with partner companies by 2025,” said the e-commerce expert.

The company also suffered a lag in terms of earnings: it had to report a pre-adjusted loss before interest and taxes (EBIT) of 51.8 million euros, after achieving a positive corrected EBIT of 93.3 million euros in the same quarter last year. According to the statement, the deterioration in results was mainly caused by “lower gross margin due to increased advertising measures to attract customers and increased logistics costs.” The net result shows a net loss of 61.3 million euros. In the first quarter of 2021, Zalando still had a surplus of 34.5 million euros.

The company wants to react to the latest developments with a series of measures

Co-CEO Robert Gentz ​​announced changes in light of recent events. “We believe in the strength of our business model and are taking further steps to improve our results,” he said in a statement. “We have been leading Zalando for a long time and we have always successfully used our flexibility and adaptability to respond to current challenges and become better and stronger. »

In particular, the company wants to better align its offer with changing customer preferences, increase profitability and continue to invest in quality services and e-commerce solutions. Zalando also announced the following steps for expansion: entry into the Hungarian and Romanian markets is planned for the current month.

For 2022, Zalando now expects growth rates “at the bottom” of the forecast range

The company essentially adhered to its annual guidelines, but was more cautious than last time: it now expects sales and GMV growth rates “at the bottom end” of existing guidelines ranges. Sales growth is expected to be 12-19 percent and GMV growth 16-23 percent. Adjusted EBIT is also expected to be “at the bottom” of the targeted 430-510 million euros.

Zalando also said that investments of around 400 to 500 million euros are planned for the current year. Regarding the long-term growth goals, co-CEO Gentz ​​expressed optimism: “We remain confident that we will achieve our goal of more than 30 billion euros of gross goods for this 2025,” he stressed.

This article originally appeared on FashionUnited.de. It was translated into French and edited by Julia Garel.

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