The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
Zalando SE’s 2022 earnings beat analyst estimates as the German online fashion retailer’s new focus on profitability boosted the results. Shares rose as much as 6 percent.
The Berlin-based e-commerce platform reported adjusted earnings before interest and taxes of €184.6 million ($197 million) last year, it said in a statement Tuesday. That compares to the average estimates of €158.1 million among analysts surveyed by Bloomberg.
The company, which sells a mix of its own-brand and third-party apparel, has been taking steps to improve its margins as online retailers struggle with inflation and rising rates. Zalando in February announced job cuts, joining a growing number of tech firms to resort to layoffs.
“The challenges of 2022 demanded us to be laser-focused on profitable growth and we acted quickly and decisively with measures that improved margins such as the introduction of minimum order values,” chief financial officer Sandra Dembeck said in the statement.
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Adjusted EBIT this year is seen in the range of €280 million to €350 million, Zalando said. That compares with analyst estimates of €279 million adjusted operating income. The guidance is the first indication of how its efforts to control costs may impact earnings in 2023.
Zalando has focused more on profitability as high inflation and people returning to stores following the Covid-19 pandemic hurt online retail sales. Its UK rival Asos Plc also recently announced a plan to cut costs and streamline its business, prioritising profitability over growth.
Zalando’s 2022 16 percent Ebit beat with new 2023 guidance of €280-€350 million, 13 percent ahead of consensus at midpoint, suggests profit upgrades. The implied margin recovery to 2.6-3.1 percent brings the e-tailer closer to its mid-term target corridor of 3-6 percent and underlines its winning marketplace strategy. The balance sheet provides ample liquidity to invest through the e-commerce slowdown and come out stronger.
By Agatha Cantrill
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Zalando to Cut Hundreds of Jobs
Zalando said the pandemic had boosted business in 2020 and 2021, but these tailwinds had faded since 2022 and the macroeconomic environment had become more challenging.
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