Zalando has lowered its expectations for its current financial year as consumer confidence falls.
The Berlin-based business says it now expects the macroeconomic challenges it faces to be both longer-lasting and more intense than previously expected.
In the current financial year it now expects goods worth between €14.8bn (£12.7bn) and €15.3bn (£13.1bn) to be sold on its platform – representing an increase in gross merchandise volume (GMV) of between 3% and 7%. It also expects revenues to grow by between 0% and 3%, in the range of €10.4bn (£8.9bn) and €10.7bn (£9.2bn), and adjusted earnings before interest and tax (EBIT) to come in at between €180m (£154.4m) and €260m (£223.1m). It then expects to spend between €350m (£300.3m) and €400m (£343.2m) in capital investment.
It cites median analyst estimates of 5% growth in GMV, 1.5% growth and EBIT of €104m.
Zalando says that while its second quarter is profitable it is also weaker than expected, and it is therefore taking action to adapt to the current challenges and improve profitability. Already it has cut its investment on marketing, adjusted its investment in logistics and introduced a minimum order value in 15 markets.
“While this new environment is creating a negative impact on our financial performance, our strategy and long term goals are unchanged,” says Zalando co-chief executive Robert Gentz. “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 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.”
Zalando, whose UK website is ranked Top500 in RXUK Top500 research, was founded in Berlin in 2008 and now sells in 25 markets including the UK.