LONDON (Reuters) – Europe’s biggest online fashion retailer Zalando sees continued pressure on demand for the rest of the year and now expects 2023 sales to decline, the company said on Wednesday as it reported weaker than expected third-quarter revenue.
Zalando, a multi-brand platform that sells clothes, shoes, accessories, and beauty products, has been hurt by a pullback in online shopping after a COVID-19 pandemic-era boom, a trend that has also bruised other online-only retailers like ASOS and Boohoo.
Zalando now expects 2023 revenue to fall by between 0.5% and 3%, having previously guided to a 1% decline at worst and a 4% gain at best. Third-quarter sales of 2.275 billion euros ($2.41 billion) missed analysts’ estimates and were down 3.2% from the same quarter last year.
An unusually warm September weighed on sales of autumn and winter clothes, Zalando said, exacerbating the impact of weak consumer sentiment. The Germany, Austria, and Switzerland region was the worst-performing, with sales down 5.6% over the quarter.
Apparel has been one of the weakest segments for online retailers in Germany, according to ecommerce industry association BEVH. Online apparel sales fell 17.5% in the third quarter compared to the same period last year, BEVH said in a report published last month.
Faced with tougher competition at lower price points from Shein and other new rivals, Zalando is trying to grow its luxury brand offering, rolling out a new “boutique-style” space for designer brands.
While the number of orders fell, Zalando’s average basket size increased to 58.9 euros from 56.2 euros a year ago, in a sign shoppers are buying bigger-ticket items.
Zalando shares have lost a third of their value since Jan. 1. The company’s market value has dropped over the past two years as shoppers, freed from pandemic restrictions, returned to stores and ordered fewer clothes online.
($1 = 0.9438 euros)
(Reporting by Helen Reid; Editing by Christian Schmollinger)
