Online fashion giant Zalando has said it will focus on growing its profitability this year after sales slowed against a “challenging economic backdrop” in 2022.

Highsnobiety homepage

Zalando acquired a majority stake in global fashion brand Highsnobiety in 2022

Despite Zalando achieving its updated full-year guidance, it attributed the slowdown in sales to shoppers returning to stores combined with a low consumer sentiment, which “resulted in elevated inventory levels across the market”.

For the 12 months to December 31, 2022, gross merchandie volume (GMV) increased 3% to €14.8bn (£13.14bn), while revenues reached a “stable” figure of €10.3bn (£9.14bn), in comparison to €10.35bn (£9.2bn) year on year.

For the full year, the fashion retailer posted an adjusted EBIT of €184.6m (£163.88m), down from €468.4m (£415.84m) in 2021.

Zalando reported that its number of active customers grew 6% to more than 51 million last year and its loyalty programme more than doubled its membership figure to more than 2 million. 

Zalando said its customer growth reflects that the business is “making progress to be the starting point for fashion”. 

The German fashion platform is now targeting GMV growth of between 1% and 7% this year, and a revenue increase of 1% to 4% year on year. 

Adjusted EBIT of between €280m and €350m (£248.57m and £310.72m) is expected in 2023 and the retailer maintains its adjusted EBIT margin goal of 3%-6% by 2025. 

Following Zalando’s acquisition of a majority stake in global fashion brand Highsnobiety last year, the retailer said it will focus on “improving the relevance of and curating its assortment”, as well as improving its margin and investing selectively.

Co-chief executive Robert Gentz said: “The fact that we were able to continue to grow our customer base in the current economic environment shows that our core strategy is working. 

“We want our customers to love Zalando and that’s why we are deepening our relationships with them.  

“Understanding their needs and likes is crucial. Then they’ll keep coming back to us and stay longer with us. 

“Our long-term ambition remains unchanged. We remain confident that we will return to double-digit GMV growth in the mid-term, by further executing on our vision and strategy, and eventually serve 10% of the €450bn European fashion market.”