Zalando profits and sales slip as supply chain and inflation costs bite

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Zalando has reported dropping profits and revenues as rising inflation and the cost-of-living crunch impacted its bottom line.

Zalando packaging

Zalando reported a 1.5% drop year on year in revenues

The German-based fashion retailer reported a 1.5% drop year on year in revenues to €2.2bn (£1.9bn) and a 2.4% slip in adjusted group EBIT to €51.8m (£49.2m) for the first quarter of the year.

Gross merchandise volumes were up 1% to €3.2bn (£2.7bn), but Zalando said it expected its full-year financial guidance for the year would be at the lower end of profitability between €430m (£364m) and €510m (£431m).

Zalando co-chief executive Robert Gentz said: “Our business fundamentals are strong and we are taking steps to improve our results.

“We are managing Zalando for the long term and have always used our business agility and adaptability to successfully respond to short-term challenges and consumer demand to emerge better and stronger.

“We remain confident that we will achieve our ambition to reach more than €30bn euros GMV by 2025.”

The retailer blamed “rising inflation and increasing costs for households” for decreased customer confidence and the easing of pandemic restrictions for softening online demand.

Zalando said that “customers are shopping for more seasonal and trend-based items” and “are veering towards either high-end assortment or shifting from mid-market towards entry prices” where they can.

Despite the challenging conditions, Zalando said the quarter had been spent deepening relationships with consumers, growing its active customer base by 5.2% to nearly 49 million.