The online retailer Zalando will present its figures for the past year next Wednesday. What will be of particular interest is how Berliners fared in the Christmas business and at the start of the year despite the slump in consumption.
This is what Zalando expects
The continued lack of demand in Europe is weighing on the mood at Zalando. Consumers again spent less money on clothing in the third quarter; September was too warm for that, so interest in fall and winter clothing was rather weak, according to previous information. The number of active customers remained roughly stable compared to the previous year. However, customers ordered less often. Zalando counts anyone who orders at least once in the past twelve months as active customers. This also includes those consumers who sometimes return goods.
The online stores in the individual countries in particular suffered in the third quarter. Zalando divides its 25 markets into two divisions: In addition to the DACH area with Germany, Austria and Switzerland, the DAX group includes all remaining countries "Rest of Europe" together. On the other hand, sales developed positively in the outlet stores, which customers can find online and in selected larger cities.
The fact that the operating profit (EBIT) in the third quarter, adjusted for special effects, increased by over 70 percent compared to the same period last year is due to lower costs in the logistics area, for example. For the year as a whole, CEO Robert Gentz and CFO Sandra Dembeck want to achieve earnings before interest and taxes and adjusted for one-off items of between 300 and 350 million euros.
However, following the latest forecast cut, other key figures are likely to be weaker than previously forecast. For the past year, the board now only expects stagnating sales of around 10.3 billion euros in the best case scenario, although a slight decline is also possible. The gross merchandise volume (GMV) is now expected to be between 14.5 and 14.9 billion euros, after just under 14.8 billion in the previous year.
This is what the analysts expect
JPMorgan analyst Georgina Johanan recently analyzed how often individual websites of fashion retailers are visited. Their conclusion: The data for Zalando not only showed weaker Christmas business compared to the previous year. At the beginning of the new year, consumers were also significantly more cautious. In the worst case scenario, she can even imagine a decline in gross merchandise volume (GMV) in 2024.
Expert Matthew Abraham from the private bank Berenberg suspects that the first half of the year will continue to be difficult for Zalando due to the slump in consumption and heavy discounts. However, he sees light at the end of the tunnel: buyer reluctance is likely to ease by the middle of the year and demand will therefore recover. In addition, Zalando’s marketplace model should stabilize business.
DZ Bank analyst Thomas Maul was skeptical. He doesn’t expect any new impulses from next week’s strategy update that could cause the average estimates to skyrocket. “It remains to be seen to what extent Zalando will succeed in weaning consumers from high discounts and strengthening its positioning in the premium segment in a very competitive market environment.”
Maul assumes that the Zalando board of directors will expect growth in gross merchandise volume (GMV) in the mid to high single-digit percentage range and an EBIT margin approaching the six percent mark for the next few years.
Overall, analysts surveyed by the Bloomberg news agency are more pessimistic than Zalando for the past year. On average, they expect sales to decline to just under 10.2 billion euros. They assume that the gross merchandise volume will decrease to almost 14.7 billion euros. The profit (EBIT) adjusted for special effects is also likely to be a good 280.2 million euros, smaller than Zalando forecast.
According to industry experts, Zalando is likely to grow again in 2024: on average, they expect sales to increase to a good 10.5 billion euros. Of this, around 380 million euros, adjusted for special effects and before interest and taxes, will remain with Zalando. The gross merchandise volume is expected to rise to almost 15.3 billion euros. (dpa)