Zalando posted the first decline in quarterly sales in its history and launched a profit warning for the full year.
In the first quarter, the German online retailer reported a 1 percent increase in the gross merchandise volume (GMV) to €3.2 billion but a 1.5 percent decline in revenues to €2.2 billion. Adjusted Ebit was a negative €51.8 million in the first quarter, compared with a year-earlier profit of €93 million, resulting in a negative margin of 2.4 percent against a positive margin of 4.2 percent, mainly due to more promotional activities to attract customers and increased fulfillment costs.
In the wake of the first-quarter results and “in light of the increasingly volatile market environment, including the ongoing negative impact from the war in Ukraine,” Zalando expects full-year results at the lower end of its guidance in terms of GMV and revenue growth as well as adjusted EBIT. The 2022 guidance, released on March 1, had already been defined as “modest” by Credit Suisse. The outlook targets a GMV growth of 16 to 23 percent and 12 to 19 percent revenue growth. The adjusted Ebit range was set at €430 million to €510 million, and capital expenditure is forecast at €400 million to €500 million.
“The main issue is that people just aren’t into buying fashion,” explained the co-CEO, Robert Gentz. “We believe in the strength of our business model and are taking further actions to improve our results,” he added.
According to Gentz, the company can use its “business agility and adaptability to successfully respond to short-term challenges and consumer demand to emerge better and stronger.” Zalando announced that active customers increased by 5.2 percent in the first quarter and 17 percent over 12 months, to nearly 49 million, while Zalando Plus memberships increased by 150 percent year-over-year.
The retailer continues to expand its logistics network by adding fulfillment centers. Construction has begun in Frankfurt and Bydgoszcz, Poland, and, most recently, in the Paris region. Following launches in six countries in 2021, Zalando will be entering two new markets, Hungary and Romania, in May. The company remains confident of reaching more than €30 billion of GMV by 2025.
