Zalando, Europe’s premier online fashion retailer, confronts evolving challenges in demand for the remainder of the year. This has led the company to reevaluate its 2023 sales forecast. The adjustment comes in the wake of a third-quarter revenue that fell below expectations.
As a versatile multi-brand fashion and beauty platform, Zalando has been navigating a shift in online shopping patterns post-pandemic, mirroring the experiences of other online-only retailers like ASOS and Boohoo.
Zalando now anticipates a revenue decrease ranging from 0.5% to 3% for 2023, a significant shift from its earlier guidance, which spanned from a 1% decline to a 4% gain. In the third quarter, sales amounted to €2.275 billion ($2.41 billion), missing analyst predictions and showing a 3.2% decrease compared to the same period last year.
An unseasonably warm September weighed on sales of autumn and winter clothing, compounding the effects of subdued consumer sentiment. The most impacted region was Germany, Austria, and Switzerland, where sales dropped by 5.6% during the quarter.
The apparel segment has been a challenge for online retailers in Germany and beyond, as highlighted by the e-commerce industry association BEVH. Online apparel sales in the third quarter dropped by 17.5% compared to the same period last year, according to BEVH’s recent report.
In response to heightened competition from Shein and emerging rivals in the lower-priced segment, Zalando is strategically expanding its luxury brand offerings. They have introduced a new «boutique-style» space for designer brands.
Despite a decrease in the number of orders, Zalando noted an increase in the average basket size, rising from €56.2 to €58.9 compared to the previous year. This indicates that shoppers are gravitating towards larger-ticket items, highlighting that inflation hasn’t deterred many from indulging in fashion purchases.
Zalando’s shares have faced a decline, losing a third of their value since the start of the year. This trend aligns with the broader shift toward in-store shopping as pandemic restrictions ease, leading to reduced online clothing purchases.