The pandemic is still influencing Zalando‘s results, and in unexpected ways. As the bar was set so high last year due to online sales profiting from the lockdowns, doing even better this year was out of the question. The German fashion webshop did manage to attract more customers, but they filled their baskets less than before. Indicators such as turnover and profit therefore remained flat or even suffered a serious drop.
More (but smaller) shopping baskets
First the good news for Zalando: the company continues to expand its customer base. This is especially true for the Zalando Plus loyalty programme (which gained 164 % more members in one year) as well as for the total number of active customers (+ 11 % to 49 million). In addition, all of these customers placed slightly more orders than last year: on average 5.2, compared to 5.0 the year before.
However, every Zalando customer put an average of two euros less in their shopping basket, which resulted in the gross merchandise volume remaining exactly the same at 3.78 billion euros. A success, Zalando itself claims, since the basis of comparison was particularly high: in the second quarter of 2021, Zalando recorded a growth of 40 %. However, Zalando’s own revenues fell by 4 % to 2.6 billion.
This makes the second quarter even less good than the first: three months ago, gross merchandise volume still rose (by 1 %) and own revenues fell by only 1.5 %.
Costs put pressure on profits
Less revenue and higher costs mean lower margins: the economic conditions shaved more than half off the profit margin (from 6.7 % to 3.0 %) and so adjusted EBIT also fell by around two-thirds (to 77.4 million euros). Net profit took an even bigger hit, and went from 120 million euros to barely 14 million.
The German company does see light at the end of the tunnel (and hopes to have reached the end already). The “successful implementation to adapt to the economic conditions” should result in better profitability in the second half of the year, it says in a press release.
Full of confidence
CFO Sandra Dembeck remains confident: “Our healthy balance sheet allows us to continue to invest into our technology platform and logistics infrastructure to enable our long term growth trajectory”. The return to growth should therefore already occur in this half of the year, as the company is “focused on efficiency and margin improvement measures”.
For the full financial year 2022, the company therefore maintains its growth forecasts in both gross merchandise volume (by 3 to 7 %) and own revenue (by 0 to 3 %). And for the sake of completeness: Zalando has not said a word about the rumoured American expansion…