The adjusted loss before interest and taxes (EBIT) fell within one year from 51.8 million euros to 0.7 million euros.
(Photo: Reuters)
Berlin Despite Group-wide cost-cutting measures, Zalando just missed the break-even point in the first quarter of the current year. However, the fashion retailer reduced the operating loss by more than 98 percent to 700,000 euros, after 51.8 million euros in the same period last year.
The job cuts that have already been initiated should relieve the company of costs more in the future. Other savings measures, on the other hand, have a negative effect, at least initially: the company’s customer numbers stagnated after savings in marketing compared to the previous quarter. Over the year, the number of customers increased by five percent.
“It was a solid first quarter,” said CFO Sandra Dembeck about the figures. Despite the slight loss, Dembeck is sticking to its annual target and continues to expect an adjusted operating result (EBIT) of between 280 and 350 million euros. However, further savings are necessary for this, Zalando wants to further reduce expenses for logistics and marketing. Dembeck admitted that April had started very slowly.
The prospect was not well received by Zalando investors. In the meantime, the share fell by more than nine percent to EUR 31.80, the lowest level this year, and was the biggest loser in the Dax. Zalando gives little hope of an impending improvement in consumer sentiment, said Baader analyst Volker Bosse.
However, Dembeck announced that the company would stick to individual investments. Zalando recently announced a fashion assistant based on the ChatGPT AI language model developed by OpenAI. In the coming weeks, a beta version will be presented to selected customers, said the CFO. It was unclear when the fashion assistant would be available to all of the current 51.2 million customers.
No new customers at the start of the year
The strong fluctuations in online shopping in recent years are causing problems for the entire industry. At the beginning of the corona pandemic, the number of customers grew particularly strongly due to lockdowns. Growth fell with the end of most protective measures, and high inflation and the European economic weakness are currently having a negative impact on retailers. Most recently, fashion retailers such as Ahlers, Gerry Weber, Peek & Cloppenburg and the department store chain Galeria Kaufhof even filed for bankruptcy.
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Zalando has been trying to get its own costs under control for a while. In the meantime, for example, free shipping is only available from a minimum purchase amount. In fact, the average shopping basket rose slightly to EUR 57.4 in the first quarter.
At the same time, the group is cutting hundreds of jobs, causing great unrest within the company. Zalando has been referring to ongoing discussions with the works councils for weeks. Dembeck did not comment on a possible conclusion of the talks.
Compared to other online fashion retailers, Zalando already performed significantly better in the first quarter of the current year. According to the industry association BEVH, sales in the online fashion market fell by a fifth throughout Germany.
Zalando, on the other hand, increased revenues by 2.3 percent to almost 2.3 billion euros. In the same quarter of the previous year, the Dax group had to cope with the first decline in sales in the company’s history. Dembeck referred above all to the success of the online outlet Zalando Lounge, which lives from discounts on branded goods.
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