Mar 7, 2023
Reading time
3 minutes
Download the article
Click here to print
Text size
aA+ aA-

Zalando battles through 2022 headwinds to report higher GMV but lower profit

Mar 7, 2023

Fashion e-tail giant Zalando on Tuesday reported gross merchandise value (GMV) up 3% in 2022 to €14.8 billion, while revenue was “stable” at €10.3 billion. Adjusted earnings before interest and taxes (EBIT) fell to €184.6 million from €468.4 billion a year ago. And net income fell to €16.8 million from €234.5 million.


So not a stellar year, but perhaps an expected one given the cost-of-living crisis, the Russia-Ukraine war and changing consumer behaviour as “e-commerce tailwinds turned into economic headwinds”.

Yet the company said 2022 saw growth in customer numbers, partner program and Plus loyalty memberships.

It has also updated its full-year guidance “against a challenging economic backdrop”. 

GMV this year should be up between 1% and 7% — the wide percentage range that it's offering serving to highlight just how uncertain conditions are at the moment. Revenue should come in anywhere between a fall of 1% and a rise of 4%, while adjusted EBIT will be between €280 million and €315 million.

The focus for 2023 is on “profitable growth” as it “simplifies for innovation and speed” and “continues to invest in strategic priorities such as driving relevance and curation of assortment and opening up logistics infrastructure to partners”.

The Germany-based business that operates Europe-wide said it’s “progressing on its strategy to grow its customer base and deepen customer relationships, outgrowing the online European fashion market in the three-year period through 2022”. 

In the latest year, the number of active customers grew 6% to more than 51 million and its loyalty program, called Plus, more than doubled its membership to over 2 million.

Co-CEO Robert Gentz said that this achievement in the current economic environment “shows that our core strategy is working”.

To continue on that path, it will carry on investing in “strategic priorities, driving customer attention around sought-after brands and assortment on the Zalando platform and helping partners to boost their direct-to-consumer business off the platform”.

The company highlighted how the proportion of partners contributing to Fashion Store GMV was 36%, up six percentage points, and Zalando Fulfillment Solutions shipped 58% of partner items, up three percentage points, in Q4.

But there’s no disguising that 2022 was a difficult year for a business more used to reporting big growth numbers. 

As consumers went back to in-store shopping post pandemic, e-commerce adoption reversed “more than initially expected [and] low consumer sentiment resulted in elevated inventory levels across the market”.

It added that “to ensure profitable growth in 2023 and beyond, the company will continue to work on improving its margin, simplifying the organisation and investing selectively through the cycle to take advantage of growth opportunities. [It] started a program in February 2023 to reduce complexity and embrace simplicity, pragmatism and frugality. This involves removing several hundred overhead roles across many of Zalando’s teams”.

The firm is also being creative with its product curation. Zalando said that “to earn and retain the attention of customers, the company is improving the relevance of and curating its assortment. With the help of Highsnobiety, which [was] acquired last year, it is highlighting fashion through storytelling, launching a fashion discovery experience that strengthens the emotional bond with customers”.

It has completed more than 80 curated product drops since the start of the collaboration, which were viewed by over 7 million unique users, “who showed increased engagement with much higher click rates”.  

To further boost customer loyalty, it’s encouraging customers to shop across the different fashion and lifestyle categories, such as Fashion, Beauty, Designer and Lounge by Zalando. 

And this seems to be working as the proportion of customers who shop in more than one product category, or proposition, is close to 20% and growing. On average these customers' spend is more than three times that of customers who only shop in one category. Similarly, Plus customers, members of the loyalty program, typically spend about three times that of non-plus members.

Co-CEO David Schneider added that “there’s a lot of growth potential within our existing customer base. On top of that, we see further opportunity in increasing penetration across our markets, where huge potential lies ahead of us”.

Copyright © 2023 FashionNetwork.com All rights reserved.