Status: 03.11.2022 08:15 a.m
The DAX group Zalando has reduced its earnings forecast. The online fashion retailer is clearly feeling the reluctance of customers to buy in times of high inflation rates.
Despite a jump in earnings in the third quarter, Europe’s largest online fashion retailer Zalando is pessimistic about the future: “The consumer climate has reached a new low and inflation is still high,” said CFO Sandra Dembeck in the morning when the quarterly figures were presented.
Zalando is not an isolated case
Against this background, the company expects a full-year result at the lower end of the targeted range. According to the forecast, which was already lowered in June, sales are expected to grow by zero to three percent in 2022. The operating result is expected to be between 180 and 260 million euros.
Like many brick-and-mortar retailers, Zalando is suffering from customers’ reluctance to buy given persistently high inflation rates. Recently, the online giant Amazon had presented a disappointing outlook and thus scared investors.
Minimum order value improves Zalando’s balance sheet
But Zalando’s quarterly balance sheet also had positive news: The company returned to growth in the third quarter, at least operationally. The adjusted operating result rose by almost 38 percent to 13.5 million euros in the third quarter. Sales increased almost three percent to 2.35 billion euros. The number of active customers increased by eight percent and exceeded the 50 million mark for the first time.
Zalando also benefited from the introduction of a minimum order value. As a result, the order volume has increased, the DAX group explained. Since customers pay a shipping fee for smaller orders, these are now also profitable. The bottom line is that the group increased its loss massively – from 8.4 million to 35.4 million euros.
Zalando share in downtrend
The difficult business environment for Europe’s largest online fashion retailer is also clearly reflected on the stock exchange. The Zalando share has been in a steep downward trend since its record high in August 2021 at EUR 105.90 and has since destroyed over 80 percent of its value. At the end of September, it reached its lowest level in seven years at EUR 19.18.