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Zalando lowers forecasts due to weak demand

Zalando lowers forecasts due to weak demand

DrOnline fashion retailer Zalando expects lower sales and lower total merchandise volume for the full year than originally targeted. The DAX Group made the surprise announcement on Wednesday evening. In the best case, sales should stabilize at just under 10.3 billion euros, and in the worst case, they should fall by 3 percent to 10 billion euros. So far, the board of directors, made up of founders and co-CEOs Robert Gentz ​​and David Schneider, has forecast sales growth of up to 4 percent. Gross merchandise volume should now be only between 14.5 and 14.9 billion euros in 2023. In 2022, the value was 14.8 billion euros, and Zalando had recently assumed growth of 1 to 7 percent. Total merchandise volume is an important indicator of how well the group’s platform business is performing. Zalando not only sells items itself, but also offers a marketplace to third parties. The value of these sales is included in the total merchandise volume. However, adjusted earnings before interest and tax (EBIT) expectations remain at €300-350 million.

Zalando justified the poorer forecast with continued weak demand for fashion in the economic environment. Due to the warm weather, September in particular was weaker. As a result, customers will not buy as much fall and winter clothing. Analysts priced in this effect, but assumed that consumption would catch up in the following months – and that the group would not have to cut its full-year forecasts accordingly. The company’s aggressive cost-cutting measures took effect. Zalando announced in the spring that it would cut several hundred jobs and also cut marketing and logistics costs. Chief Financial Officer Sandra Dembeck confirmed in a conference call with reporters that the job cuts have been completed.

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