Zalando lowers profit forecast as sales fall in second quarter

Zalando lowers profit forecast as sales fall in second quarter

Online fashion retailer Zalando revealed a 58% decline in second-quarter operating profit and sales below expectations amid a challenging macroeconomic environment and supply chain issues.

The company’s gross merchandise volume in the second quarter of 2022 amounted to 3.8 billion euros, showing a stable development compared to an “extraordinarily strong” second quarter in 2021.

Zalando cited headwinds from external factors such as declining consumer confidence, inflationary pressures and some supply shortages impacting availability.

Revenue decreased 4% to €2.6 billion due to the business transitioning to a platform model. Zalando recorded an adjusted EBIT of €77.4 million, representing a margin of 3%.

As part of its plans to adapt to the current volatile market environment, Zalando introduced a minimum order value in 15 additional markets in early June and it is now in effect in all 25 markets. The company also reduced its marketing expenses and improved the efficiency of its European logistics network.

Zalando confirmed its guidance provided on June 23, 2022 for fiscal year 2022 with gross merchandise volume (GMV) expected to grow 3-7% to €14.8 billion to €15.3 billion.

Revenue is expected to grow 0-3% to €10.4 billion to €10.7 billion with an adjusted EBIT of €180 million to €260 million during the same period. Capital expenditure is expected to be between 350 and 400 million euros.

Robert Gentz, co-CEO of Zalando, said: “We have demonstrated our agility as a team, showing that we can react quickly to adapt to the current environment while making our customers’ experience even more inspiring and engaging. We continue to grow our customer base and are fully focused on our strategy and making selective investments across our business to ensure our long-term growth.

The company will release third quarter 2022 results on November 3, 2022.

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