Zalando, the popular online fashion retailer, has announced a decline in EBIT (Earnings Before Interest and Taxes) for the second quarter of 2022. However, the company remains optimistic, expecting improved profitability and a return to growth in the latter half of the year. This follows a previous downgrade in guidance issued by Zalando in June, which disappointed some investors.
Despite the drop in EBIT, Zalando’s shares experienced a 6% increase following the announcement. The company’s second quarter Gross Merchandise Volume (GMV) remained stable compared to the strong performance in the same quarter last year. However, revenue decreased by 4% year-on-year. Adjusted EBIT for the quarter stood at €77.4 million, resulting in a margin of 3%, compared to €184.1 million and 6.7% in the same period last year.
Zalando has reinforced its guidance for the full year of 2022, predicting GMV growth of 3%-7% in the range of €14.8 billion-€15.3 billion. Revenue is expected to grow between 0% and 3%, with a range of €10.4 billion-€10.7 billion, and an adjusted EBIT of €180 million-€260 million.
The company noted several positive developments in the second quarter. Zalando Plus, the membership program, witnessed a substantial 164% growth and now boasts over 1.5 million members. The number of active customers also increased by 11% year-on-year, surpassing 49 million. Zalando stated that it is successfully executing its action plan to adapt to the current volatile market environment.
Co-CEO Robert Gentz emphasized the company’s agility in responding to the challenges of the current environment and its commitment to improving the customer experience. Zalando invested in enhancing the customer experience, particularly in the Beauty category which saw over 30% growth. The company also expanded its Plus membership program to Switzerland, Romania, and Hungary, extending its reach to 25 markets. Additionally, Zalando Lounge, the company’s off-price platform, was launched in Romania, Slovakia, and Lithuania.
In June, Zalando made an important strategic move by acquiring a majority stake in Highsnobiety, a fashion and lifestyle media company. This acquisition will bolster Zalando’s market presence and allow for further engagement with its target audience.
Zalando is continuously adjusting its offerings to meet changing customer demands, especially for the upcoming seasons. As part of its cost-saving measures, the company has introduced a minimum order value in additional markets and reduced its marketing spend. Zalando is also focusing on improving the efficiency of its European logistics network to enhance profitability.
CFO Dr Sandra Dembeck emphasized the company’s dedication to efficiency and margin improvement measures in order to strengthen profitability in the second half of the year. Zalando’s robust balance sheet allows for continued investment in technology platforms and logistics infrastructure to support long-term growth.
Overall, despite the decline in EBIT, Zalando remains positive and confident in its ability to adapt to prevailing market conditions. The company’s commitment to enhancing the customer experience and making strategic investments positions it well for future growth.
Useful links:
1. Zalando
2. Zalando Careers
