Zalando, a German online fashion retailer, reported that its underlying profits fell by 60% to €184mln in 2022 as consumers returned to in-store shopping.
Having reduced its guidance earlier in the year, Zalando’s underlying profits reached the lower end of its €180mln-€260mln forecast and fell short of the City’s consensus of €194mln.
Revenues dropped slightly from €10.35bln in 2021 to €10.34bln last year, whilst gross merchandise volumes (GMV) increased by 3% to €14.8bln.
This led to the retailer reducing the downside of guidance for 2023, with revenue expected to grow between -1% and 4% compared to 2022’s 0-3% forecast.
Zalando appears confident 2023 will not see a further fall in profits as it forecast earnings before interest and taxes to reach between €280-€350mln -still behind the record highs of €424mln in 2021.
“With Covid-19 restrictions easing, Zalando struggled to keep up with consumers' shifting shopping habits towards in-store shopping, resulting in lower-than-expected annual results,” said Shore Capital.
The online fashion market has continued to grow, just at a slower speed due to the return of high-street shopping.
Zalando witnessed a six per cent increase in active customers last year at 51 mln.
“Looking to the future Zalando has begun investing in strategic priorities, including enhancing the relevance and curation of its assortment and opening up logistics infrastructure to partners,” the UK broker added.
Turning to UK rivals, Boohoo and Asos both appear to be struggling, highlighted by the fact Asos is the second most shorted London stock and Boohoo the fourth.
Asos’s annual growth fell by 3% while it lost 30 basis points worth of market share.
Boohoo dropped 0.4% of its market share and year-on-year growth plunged by 17%.
Both the online retailers’ struggles have been further reflected through falls in their share prices, with Boohoo and ASOS trading at a 17% and 44% discount respectively compared to twelve months ago.
Zalando shares, which are listed in Frankfurt, are down 14% year-on-year and have dipped 2% since opening at €40 this morning.