The Berlin online fashion retailer Zalando SE reacted to the recently unexpectedly weak demand on Thursday evening and significantly downgraded its forecasts for the current financial year. The company cited that “macroeconomic conditions deteriorated in Q2 2022 and the EU consumer confidence index fell further in June”.
It is also not to be expected that “consumer sentiment will recover in the short term,” explained the e-commerce specialist in an ad hoc release. Instead, the management is currently assuming “macroeconomic challenges that will last longer and be more intense than initially assumed”.
For the current year, Zalando now only expects sales growth of “zero to three percent” to EUR 10.4 to 10.7 billion. The gross goods volume (GMV) is expected to increase by three to seven percent to between EUR 14.8 and 15.3 million. Previously, in early May, management had forecast gains “at the lower end” of the forecast ranges of 12 to 19 percent in revenue and 16 to 23 percent in GMV.
Disappointment in the second quarter: Zalando expects results “significantly below analyst estimates”
The profit forecast was also cut. For 2022, earnings before interest and taxes (EBIT), adjusted for special effects, are now expected to be between 180 and 260 million euros. So far, the target corridor was between 430 and 510 million euros. The company also announced that it would reduce investments in the current year from 400 to 500 million euros to 350 to 400 million euros.
This was preceded by a sobering business development in the past few months: “For the second quarter of 2022, the Management Board expects that the growth in gross merchandise volume (GMV), sales growth and adjusted EBIT will be significantly below analyst estimates,” the company admitted. The second quarter was “profitable, but weaker than expected,” according to a statement. The online retailer intends to publish its full results for the months of April to June on August 4th.