By Mauro Orru

German online fashion retailer, Zalando, has revised its forecasts for the year, predicting continued pressure on demand. The company now expects a revenue drop ranging between 3% and 0.5% this year. Furthermore, its gross merchandise volume, a crucial indicator of sales performance, could either shrink by 2% or experience growth of up to 1%.

Initially, Zalando had anticipated a revenue decline of up to 1% or growth of up to 4%, with the gross merchandise volume expected to rise by 1% to 7%. However, both metrics were more likely to fall within the lower range.

During the pandemic, Zalando experienced significant growth as consumers turned to online shopping due to coronavirus restrictions. However, with the easing of the pandemic and the lifting of these restrictions last year, shoppers have returned to physical stores.

The company reported a revenue of €2.27 billion ($2.40 billion) for the three months ending in September, marking a 3.2% decrease compared to the previous year. Gross merchandise volume also declined by 2.4% to €3.20 billion.

Zalando stated that it is currently facing challenges in a difficult macroeconomic environment with low consumer sentiment and declining online sales. Moreover, warm weather in September across Europe impacted sales, as shoppers refrained from purchasing heavier clothing typically associated with the season.

The group's net loss decreased to €8.2 million from €35.4 million in the previous year. Adjusted earnings before interest and taxes, which is Zalando's preferred measure of profitability, increased to €23.2 million from €13.5 million, resulting in a 1% adjusted margin.

Zalando maintains its outlook for adjusted earnings between €300 million and €350 million for 2023.

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