Despite an increase in customer numbers, Zalando was unable to raise its sales last year. The boom that e-commerce knew during the pandemic is over, and waking up to that reality is hard, says co-CEO Robert Gentz.
“Ready for headwinds”
Despite an “incredibly difficult year”, Zalando looks back on 2022 with pride. Gentz says his company “has matured” and can now handle future headwinds. The strategy to make the retailer into a platform is bearing fruit: 36 % of all sales now come from brand partners (compared to 30 % a year earlier), while 58 % of fulfilment is done by Zalando. Since October, fashion brands can have all their logistics done by Zalando, even for their own shops or for competing platforms. Pepe Jeans, among others, uses the service.
Zalando says it needs a “laser-sharp” focus on costs and profitability, as e-commerce is declining again after the pandemic and low consumer confidence leads to high inventory levels across the market. To improve margins, the platform introduced minimum order amounts and reorganised its headquarters : hundreds of overhead functions are being cut in a lot of teams.
As such, the fashion retailer managed to turn its first-half loss into a modestly positive EBITDA in the second half of the year. Earnings before interest and taxes eventually went up to 184.6 million euros. Although Zalando added 6 % more active customers last year and the number of paying Plus members doubled to more than two million, sales remained stable at 10.3 billion euros. Its sales volume (as in, the value of all orders) rose 3 % to 14.8 billion euros.
Following Asian example
This year, the fashion platform plans to focus further on data and content: in 2022, for instance, Zalando acquired Highsnobiety, which combines storytelling and curated product drops. Last year, eighty drops together attracted seven million viewers. The platform also sees great potential in the beauty segment for content and interaction with consumers. Zalando also sees that Plus customers spend about three times as much as regular customers.
For this year, Zalando expects volume growth of between 1 and 7 %, with a low sales evolution between – 1 and 4 %. CFO Sandra Dembeck estimates an adjusted gross profit between 280 and 350 million euros. A deliberately cautious forecast, as “there is still a lot of volatility and uncertainty”. E-commerce today is back at pre-pandemic estimates, but it is still a long way behind Asian markets – especially in fashion, Gentz concludes.