Zalando, the popular German online fashion retailer, has made a revision to its guidance for the year, citing worsening macroeconomic conditions as the primary reason. The company is pointing to a further decline in the EU consumer confidence index as the cause for this downgrade. While their previous outlook, released in early May, had suggested that the full-year guidance would likely fall towards the lower end, Zalando had anticipated possible challenges and signs of recovery. However, the latest update now reveals that the macroeconomic challenges will be more intense and long-lasting than previously thought.

In terms of the second quarter, Zalando is expecting significant declines in Gross Merchandise Volume (GMV) growth, revenue growth, and adjusted EBIT compared to the estimates provided by analysts. Even though the quarter remains profitable, the company has stated that their figures for Q2 are weaker than anticipated. Zalando no longer assumes a short-term rebound in consumer confidence and as a result, they have reduced their guidance for the full year of 2022. They now anticipate GMV growth between 3% and 7%, within a range of €14.8 billion to €15.3 billion. Revenue is expected to remain flat or increase by up to 3%, ranging from €10.4 billion to €10.7 billion, while adjusted EBIT is estimated to range between €180 million and €260 million. In terms of capital expenditure, Zalando predicts it will fall within the range of €350 million to €400 million.

Zalando has stated that this revised outlook sets the stage for accelerated growth and a significant improvement in profitability during the second half of 2022. The company plans to achieve this by adjusting their offerings to meet the evolving demands of their customers and driving efficiencies across all cost lines. Robert Gentz, the Co-CEO of Zalando, has emphasized that despite the negative impact of the new environment on their financial performance, the company remains steadfast in their long-term goals and strategy. He expressed confidence in Zalando’s ability to capitalize on untapped opportunities in the fashion market and foster positive change within the industry. Gentz also reiterated their commitment to embracing challenges and adapting in order to emerge stronger. Zalando will release its Q2 figures on August 4th, providing further insight into their performance.

Useful links:
1. Zalando Official Website
2. EU Consumer Confidence Index