Zalando faces a second-quarter slump

After a disappointing financial year 2022, the German group was hoping to continue its growth which began in the first quarter. Unfortunately, the April-June period showed a decline, with sales of 3.72 billion euros (-1.8%) and a turnover of 2.56 billion euros (-2.5%).

However, Zalando eagerly reported an 87% increase in operating profit for the second quarter, to 144.8 million euros compared to the same period a year ago. The operating margin rose from 3% to 5.7% in the space of a year.

These figures, published at the beginning of August, were particularly anticipated, given the 2.3% growth in sales in the first quarter, during which the value of goods sold on the portal itself rose by 2.8%. 

The declines in the second quarter involved both the DACH business (Germany, Austria and Switzerland), which fell by €1 billion to €938.5 million, and the rest of the European business, which decreased by €1.22 billion to €1.15 billion. On the other hand, the group says it has seen a significant acceleration in sales at knock-down prices, which rose from €376 million in the second quarter of 2022 to €436 million over the same period in 2023.

At the end of the half-year, the German group claimed to have 50.5 million active consumers. The number of quarterly orders, meanwhile, fell year-on-year, from 67.8 to 63.2 million. While the average number of orders per shopper over the last twelve months has fallen from 5.2 to 5, the average basket has risen from 55.9 to 58.1 euros, reflecting inflation.

For 2023, the Group now expects sales volumes to grow by between 1% and 7%. Sales scenarios range from a decline of 1% to an increase of 4%. Management has indicated that the final figures are likely to be in the lower range. 

At the beginning of March, Zalando forecast a sluggish 2022 financial year, with €14.8 billion of goods sold and sales of €10.3 billion. While it remains optimistic for the future, management has nevertheless announced several hundred job cuts, in particular to improve responsiveness after “growing too fast”. And after years of seeing the breadth of its catalogue as its main strength, Zalando now intends to reduce the scope of its offering, to make it more relevant.