Poland’s largest e-commerce company, Allegro, is expecting slower growth in the second quarter due to inflation leading to a decrease in consumer spending. The company has announced that it anticipates a 13-16% rise in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), compared to the previous quarter’s increase of 29.7%. Additionally, Allegro predicts that its gross merchandise value (GMV) growth in Poland will decrease to 11-12%, down from the 14% recorded in the first quarter.

To navigate this challenging situation, Allegro is prioritizing cost control as it integrates its acquisition of Czech online retailer Mall and adjusts to reduced consumer spending. CEO Roy Perticucci expressed caution about the pace of consumer demand recovery in Poland, suggesting that it is unlikely to happen rapidly. Chief Financial Officer Jon Eastick revealed that consumers are downgrading their purchases and delaying discretionary spending.

Following Allegro’s announcement, the company’s shares experienced a 6% decline, which was likely due to profit-taking, as the stock had already surged by 46% this year. Analysts from Jefferies noted that the second-quarter guidance appeared weak compared to consensus, while analysts from Trigon DM brokerage regarded the expected slowdown in GMV growth in Poland as slightly negative.

In the first quarter, Allegro’s adjusted EBITDA reached 600.6 million zlotys ($145 million), surpassing the company’s own poll estimate of 560 million zlotys. This positive outcome was attributed to higher GMV and take rates, substantial growth in advertising revenue, and effective cost control. Allegro reported no adverse effects on customer retention or spending patterns from increasing the price of its Smart! subscription program. Eastick emphasized that the company continues to closely manage its employment levels and capital investment, resulting in a 1% decrease in staff costs compared to the previous quarter.

Furthermore, Allegro shared encouraging news about the recent soft launch of its marketplace in the Czech Republic, describing the initial results as very promising. Despite the challenges posed by the current economic situation, Allegro remains committed to adapting and sustaining its growth in the e-commerce market.

Useful links:
1. [Allegro’s Integration of Czech Online Retailer Mall]()