Zalando warns on profits as customer demand wanes

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Zalando has issued a profit warning after a worse-than-expected second quarter.

Zalando stradella warehouse

For the full year, Zalando expects gross merchandise volume to grow by 3% to 7%

The German fashion platform has revised its guidance for the full year as “macroeconomic conditions have further deteriorated”.

Zalando previously indicated that its full-year results would be at the lower end of analyst expectations, but has now said it expects them to be significantly below as the challenges of inflation and the cost-of-living crisis hit customer demand.

The retailer said it expects these issues to be much longer lasting, with little rebound in the short term.

For the full year, Zalando expects gross merchandise volume to grow by 3% to 7% or €14.8bn (£12.3bn) to €15.3bn (£13.1bn).

Revenue is expected to grow by 0% to 3% or €10.4bn (£8.9bn) to €10.7bn (£9.2bn), with an adjusted EBIT of €180m (£154.5m) to €260m (£223m) in the same period.

The fashion giant added that the revised outlook indicates some recovery in the second half of the year as management drives efficiencies in areas such as marketing spend and logistics.

Zalando is also introducing a minimum order value across 15 additional markets.

Zalando co-chief executive Robert Gentz said: “While this new environment is creating a negative impact on our financial performance, our strategy and long-term goals are unchanged. Our vision remains to be the starting point for fashion in Europe.

“There are many untapped opportunities in the fashion market that we can capture and we are committed to change the industry for the better. By driving efficiencies across the company and selectively investing through cycle, we will be even better positioned long-term to execute against our strategy.

“We are embracing the challenges and adapting to emerge stronger.”