Zalando shares lower outlook as recession risks rise
By Mauro Orru
Shares of German online retailer Zalando SE plunged on Friday morning, a day after the company reported a weaker-than-expected second quarter, prompting it to revise its forecast for the year down, consumers buying less in a context of rising inflation and growing risks of recession.
Eurozone consumer confidence declined in June due to rising costs of living and a slowing economy. The US and European economies have slowed sharply as soaring energy and food prices have weakened demand for other goods and services, according to business surveys. Russia’s war in Ukraine hit growth as high inflation spread across the world.
At 07:50 GMT, Zalando shares were trading down 14% to 21.95 euros.
Zalando said it had a profitable but weaker-than-expected second quarter, with sales and earnings well below analysts’ forecasts.
The company has lowered its forecast for the year because it “no longer expects a rebound in consumer confidence in the short term”.
He said he now expects sales to increase by up to 3%, compared to previous forecasts of between 12% and 19%. Gross merchandise volume – a closely watched metric that tracks sales performance – is expected to rise 3% to 7%, rather than down between 16% and 23%. Adjusted profit before interest and tax – a key measure of profitability – is expected to be between 180 million euros ($189.4 million) and 260 million euros, well below previous guidance of between 430 and 510 million euros.
Deutsche Bank analysts wrote in a note to customers that Zalando’s “significant” yet “realistic” guidance cuts would help retailers reassess the investment case for online retailers who have benefited from banner two years as home consumers turned to online shopping at the height of the pandemic.
“At this stage, the evidence points to this being largely an online issue due to the re-opening of stores, but the direction of travel is rapidly heading towards a likely cliff edge for the European consumer” , said Deutsche Bank analysts.
Write to Mauro Orru at [email protected]; @MauroOrru94