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The crisis is approaching the fashion retailer

AndThis is not a good time for non-essential goods traders. With inflation rates around 8 percent and energy prices rising by a good third, many consumers are wondering what they can do without. Fashion and cosmetics are obviously part of many, and this strongly affects Europe’s largest trading platform for these products, the company Berlin Dax Zalando.

The group is already struggling to balance its business in the post-Crown period. After the pandemic, during which he and his investors were successfully spoiled, Zalando experienced the first sales decline in its corporate history earlier this year. In the spring quarter from March to June the group is now grappling with the crisis of war and inflation.

Earnings “significantly” below analysts’ expectations

So much so that the company’s management apparently felt compelled to announce in an ad hoc statement on Thursday evening that the growth in sales, profits and value via the Distributed Items Platform (GMV) are “significantly” below the levels. current expectations of analysts. As a result, its share price plummeted a good 8% in after-hour trading. “The second quarter is profitable, but weaker than expected,” Zalando wrote.


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To the detailed view

The company did not disclose exact figures, Zalando wants to continue to present quarterly results on August 4th. So you might be thinking: profitable after all. Because in the first quarter of the year there was a deficit of 51.8 million euros in operating income (adjusted and before interest and taxes). However, the point at which the announcement then provided concrete figures – with the corrected annual outlook – risks largely shattering investors’ hopes.

Almost zero growth forecast

Zalando roughly halved its earnings forecast and cut revenue growth expectations to near zero. Instead of an operating profit of at least 430 million euros this year, only between 180 and 260 million are now expected, instead of 12 percent sales growth from only 0 to 3 percent. After the decline in sales in the first quarter of the year, it is now possible that Zalando will not grow throughout the year: these are new times for a company that was born as a start-up and has always defined itself through its growth ever since.

On the abyss: Zalando parcel


On the abyss: Zalando parcel
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Image: dpa

Berliners are still investing, even if they slightly reduce the annual budget from 400 to 500 million euros to 350 to 400 million. However, the forecast is based on the fact that activity will improve in the second half of the year and that growth will return to growth.

Zalando wants to improve, especially when it comes to profitability. In the last quarter, the company reduced its marketing expenses, modified its investments in its logistics to achieve greater use of individual shipping centers and introduced minimum order values ​​in 15 markets. This means that customers in almost all 25 countries of the group now have to reach a minimum order amount in order to receive their fashion for free. In Germany, this minimum order value is € 24.90.

However, it is unclear whether Zalando will achieve its long-term goal of selling assets worth € 30 billion by 2025. According to the bearish forecast, GMV is expected to reach around € 15 billion this year. But that would only be half the way. “While the current environment is negatively impacting our financial development, our strategy and long-term goals remain unchanged,” said co-CEO Robert Gentz ​​boldly.

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