Zalando Tweaks Strategy After Revenues Dip 1.9% in 2023

PARIS – Underscoring anemic demand for fashion in online channels, Zalando reported revenues in 2023 declined 1.9 percent to 10.1 billion euros, and its GMV, or gross merchandise volume, slipped 1.1 percent to 14.6 billion euros.

The German company noted that adjusted full-year EBIT jumped to 350 million euros from 185 million euros, representing a 1.7 percentage point uptick in its EBIT margin.

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In tandem with releasing 2023 numbers, Zalando said it would boost its B2B business by “opening up its logistics infrastructure, software and service capabilities to become a key enabler for brands and retailers on and off the Zalando platform.”

For its consumer-facing activities, the retailer said it would differentiate itself “through quality, expanding into more lifestyle propositions and making fashion discovery more inspiring and entertaining.”

It argues that the new “ecosystem model” would allow it to “cover a larger share” of the fashion and lifestyle e-commerce market, which is facing numerous challenges.

“Our ambition is to return to strong growth and continue our margin expansion, as reflected in our new mid-term guidance,” Robert Gentz, co-chief executive officer of Zalando, said in a statement. “In B2C we will move beyond transactions by giving our 50 million customers across Europe even better quality experiences and products that fit their lifestyle and personalized content, inspiration and entertainment. In B2B, we will power the businesses of partners and merchants on and off Zalando, leveraging our unique logistics infrastructure, software and services.”

The company plans to elaborate on the strategy during a press conference later today.

It said the new strategy would help it achieve new financial targets over the next five years.

Zalando said it aims to generate a compound annual growth rate of 5 percent to 10 percent for both revenues and GMV.

“The outlook for adjusted earnings before interest and tax (adjusted EBIT) as a percentage of revenue is 6-8 percent in 2028,” it said. “With both B2C and B2B, Zalando aims to cover in the long term the equivalent of 15 percent of the European fashion market, which is worth 450 billion euros.”

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