Berlin-based online fashion retailer Zalando SE suffered the expected setback at the start of fiscal 2022. In the first quarter, the growth-accustomed company’s sales were below the previous year’s level. According to the report published Thursday, the e-commerce expert has fallen into the red.
During the months of January to March, the group’s sales totaled just under 2.21 billion euros, 1.5 percent below the level of the same quarter of the previous year. For Zalando, this is the first decline in the company’s history. The reporting period was “characterized by macroeconomic influences,” the company said. “Rising inflation and rising costs for households” would have made customers more reluctant to buy. Furthermore, “the gradual easing of the changing pandemic environment” has led to changes in consumer preferences, i.e., people have switched to products other than those previously sought after. Consumers are again “increasingly interested in seasonal innovations and the latest trends,” the company explained.
The quarterly loss is around 61 million euros
In contrast, Zalando slightly increased its gross goods volume (GMV) by 1.0% to €3.18 billion. According to the company, this is due to the “strong growth in the activity of partners”, whose share in the total GMV of the online platform increased to 32 percent. Zalando is on the right track to reach the established goal: “to reach 50% of the gross volume of goods in the Zalando store with partner companies by 2025”, highlighted the e-commerce specialist.
The company also suffered a setback in terms of results: it had to report an adjusted loss before interest and taxes (EBIT) of 51.8 million euros, after having achieved a positive adjusted EBIT of 93.3 million euros in the same quarter. from the previous year. According to a statement, the deterioration in results was mainly due to “a lower gross margin due to increased advertising measures to attract customers and increased logistical costs”. The net result shows a net loss of 61.3 million euros. In the first quarter of 2021, Zalando had still generated a surplus of 34.5 million euros.
The company wants to react to the latest developments with a set of measures
Co-CEO Robert Gentz announced changes in light of recent developments. “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 guided Zalando for the long term and have always successfully used our flexibility and adaptability to react to current challenges and emerge better and stronger. »
Specifically, the company intends to better align its offer with the evolution of customer preferences, increase profitability and continue to invest in service quality and e-commerce solutions. Zalando also announced the next steps for expansion: entry into the Hungarian and Romanian market is scheduled for the current month.
For 2022, Zalando now expects growth rates “at the bottom” of forecast ranges
The company essentially stuck to its annual guidance, but was more cautious than last time: it now expects sales and GMV growth rates “at the lower end” of existing guidance ranges. Sales growth is expected to be 12-19 percent and GMV is expected to increase by 16-23 percent. Adjusted EBIT is also expected to be “on the lower end” of the €430-510 million target.
Zalando also said that investments in the order of 400 to 500 million euros are still planned for the current year. Regarding the long-term growth targets, co-CEO Gentz expressed optimism: “We remain confident that we will reach our target of more than 30 billion euros in gross volume of goods here in 2025”, he pointed out.
This article was originally published on FashionUnited.de. It was translated and edited in French by Julia Garel.