Zalando revises guidance downwards as economy struggles
German online fashion e-tailer Zalando has been forced to revise its guidance for the year, citing a further deterioration in macroeconomic conditions.
In a Q2 update on Friday, the retailer said the downgrade follows the EU consumer confidence index decreasing further in June.
The company’s previous outlook, from early May, pointed to the lower end of full-year guidance “based on anticipated challenges but also early signs of a potential recovery”.
Not now. In the update, management now expects those macroeconomic challenges to be “longer-lasting and more intense than previously anticipated”.
For Q2, it expects Gross Merchandise Volume (GMV) growth, revenue growth and adjusted EBIT to be “significantly below” analyst estimates. It cited company-compiled median analyst estimates as of 31 May at 5% GMV growth, 1.5% revenue growth, and €104 million adjusted EBIT. Zalando added that while Q2 is profitable, numbers are “weaker than expected”.
On the back of the retailer “no longer assuming a rebound of consumer confidence in the short term”, the reduced guidance for the full year 2022 sees it now expecting GMV to grow 3-7% to €14.8 billion-€15.3 billion. Revenue is expected to be flat-to-up 3% at €10.4 billion-€10.7 billion, with adjusted EBIT of €180 million-€260 million in the period. Capital expenditure is expected to range from €350 million-€400 million.
Zalando said: “The revised full-year outlook implies an acceleration of growth and a significant improvement in profitability in the second half of 2022 based on an ongoing company-wide effort to adjust the offer to changing customer demand and to drive efficiencies across all cost lines.”
Robert Gentz, Co-CEO, added: “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."
He added: “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."
The company will publish its Q2 figures on 4 August.
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