// Zalando reveals a 58% drop in second-quarter operating profit but says it expects to post improved profitability and a return to growth in the second half of the year
// Revenue fell by 4% to €2.6 billion mainly due to the transition of the business to a platform model
Zalando has said it expects to post improved profitability and a return to growth in the second half of the year after its number of active customers grew by 11% to over 49 million in its second quarter.
However, the online fashion retailer revealed a 58% drop in second-quarter operating profit and lower than expected sales amid a challenging macroeconomic environment and supply chain challenges.
The company’s gross merchandise volume was flat in the quarter at €3.8 billion after trading was impacted by lower consumer confidence and inflationary pressures.
Zalando cited headwinds from external factors such as lower consumer confidence, inflationary pressures and selected supply shortages impacting availability.
Meanwhile revenue fell by 4% to €2.6 billion mainly due to the transition of the business to a platform model. The business reported an adjusted EBIT of €77.4 million in the period resulting in a margin of 3%.
Zalando also confirmed that guidance lowered in June, forecasting a sales increase between 0% and 3% and an adjusted EBIT of €180 million to €260 million in the same period
To cut costs, the company said it had reduced marketing spending, introduced a minimum order value and was improving efficiency across its European logistics network.
Co-chief executive Robert Gentz said: “We have demonstrated our agility as a team, showing that we can react quickly to adapt to the current environment while also making the experience of our customers even more inspiring and engaging.
“We continue to grow our customer base and are fully focused on our strategy and making selective investments across our business to ensure our long-term growth.”
The retailer will report the results for the third quarter 2022 on 3 November 2022.
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