The Berlin online fashion retailer Zalando SE was able to significantly reduce its loss in the third quarter of the 2023 financial year. However, the company lowered its full-year forecasts for gross merchandise volume (GMV) and sales on Wednesday evening due to weak consumer sentiment.
The “tense” market environment is putting a strain on demand
In the period from July to September, group sales amounted to 2.27 billion euros, 3.2 percent below the level of the same quarter of the previous year. GMV fell by 2.4 percent to 3.20 billion euros.
The company justified the decline with “a tense overall economic market environment that was characterized by consumer restraint and declining online sales.” In addition, demand for autumn and winter clothing was “negatively influenced by the warmest September on record in Europe”.
Thanks to the latest cost-cutting measures, Zalando made further progress in its earnings. Earnings before interest and taxes (EBIT), adjusted for special effects and share-based payments, which had been 13.5 million euros in the same period of the previous year, increased to 23.2 million euros. The reported net loss fell from 35.4 to 8.2 million euros.
In view of the successful cost reductions, CFO Sandra Dembeck believes the company is on the right track: the “financial discipline” has paid off and ensured “another quarter of improved profitability,” she explained in a statement.
Management is sticking to its earnings target
In view of the latest developments, management adjusted its targets for the full year. Given “the expected continued pressure on demand for the rest of the year,” it now expects sales to decline by 0.5 to three percent compared to 2022. Previously, the forecast range had been between -1 and +4 percent.
GMV is now expected to develop between -2 and +1 percent compared to the previous year. Growth of one to seven percent had previously been forecast.
The forecast for adjusted EBIT, however, remained unchanged and is still at 300 to 350 million euros.