Zalando lowers profit guidance as sales dip in Q2

Online fashion retailer Zalando has revealed a 58% drop in second-quarter operating profit and lower than expected sales amid a challenging macroeconomic environment and supply chain challenges.

The company’s gross merchandise volume in the second quarter of 2022 came in at €3.8 billion, showing a flat development compared to an "extraordinarily strong" second quarter in 2021.

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

Revenue fell by 4% to €2.6 billion due to the transition of the business to a platform model. Zalando reported an adjusted EBIT of €77.4 million, resulting in 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 at the beginning of June and it is now live in all 25 markets. The company also reduced its marketing spend and drove efficiency improvements across its European logistics network.

Zalando confirmed its guidance provided on 23 June 2022 for the financial 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 in the same period. Capital expenditure is expected to be in the range of €350 million to €400 million.

Robert Gentz, Co-CEO at Zalando, says: “We have demonstrated our agility as a team, showing that we can react quickly to adapt to the current environment while also making the experience of our customers 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 report the results for the third quarter 2022 on 3 November 2022.