The first quarter was affected by macroeconomic factors, after last year’s strong growth. Rising inflation and rising costs for households contributed to a more cautious consumer sentiment, while a relaxed pandemic environment prompted shifts in consumer preferences. Customers are buying more seasonal and trend-based items and, depending on preference, are shifting toward a high-end assortment or moving from mid-market to entry-level prices.
The gross merchandise volume from Zalando rose slightly 1% to €3.2bn, compared to extraordinarily strong growth in the first quarter of 2021. Revenue fell 1.5% to €2.2 billion, mainly due to the transition of the business to a platform model. The German company reported a Adjusted EBIT of -51.8 million euros, corresponding to a margin of -2.4%.
Robert Gentz, Co-CEO of Zalandosaid: “Our business fundamentals are strong and we are taking steps to improve our results. We are managing Zalando for the long term and have always used our business agility and adaptability to successfully respond to short-term challenges and consumer demand to emerge better and stronger. We remain confident that we will achieve our ambition of reaching more than €30 billion of GMV by 2025”.
Despite a challenging quarter, the company made substantial progress in deepening customer relationships and transforming the business to a platform model. Customer engagement continues to grow as more customers visit Zalando more often and engage more frequently with the growing range of offerings. Similarly, Zalando’s platform services saw strong engagement as partners continued to leverage Zalando’s marketing services to increase their visibility on the platform and drive sales.
As macroeconomic uncertainty continues, Zalando is managing its short-term challenges:
1) refining your offering to fit your customers’ changing spending patterns,
2) improving order economics and implementing profitable solutions,
3) continuing to invest to deliver best-in-class customer experience, partner services, and e-commerce capabilities.
“We are flexible and well equipped to guide Zalando through this volatile market environment. This includes making the necessary adjustments to improve our performance”, said the Dr. Sandra Dembeck, Zalando CFO. “At the same time, we continue to invest throughout the cycle to drive long-term value. We are expanding our logistics network and enhancing our platform to better serve our customers and partners, enable sustainable future growth, and set ourselves up for long-term success.”.
To offer customers faster delivery times, Zalando is adding more fulfillment centers to further strengthen its logistics network. Construction has already begun in Frankfurt, Germany and Bydgoszcz, Poland, and more recently in the Paris region of France. Additionally, following successful market launches in six countries in 2021, Zalando will launch in two new markets, Hungary and Romania, in May.
financial forecasts
The company confirms its forecast for the full year 2022. It expects the GMB to have a growth of 16-23%. Zalando expects to achieve an adjusted EBIT of at least €430 million to €510 million.
In addition, the results of the first quarter of 2022 have led the company to have a sharp drop in the stock market. zalando closed the day of May 5 with a decline of 10.61% up to 33.21 euros, the minimum since March 2020.
