Zalando plunges after cutting advice on deteriorating economy

Shares of the German online retailer fell the most in more than three years after Europe’s biggest online retailer cut its profit forecast, blaming worse-than-expected macroeconomic conditions.

The stock fell 17% at the start of German trading. It’s dropped about 70% this year.

The retailer said late Thursday that it expects adjusted full-year profit of 180 million euros ($190 million) to 260 million euros, well below previous guidance in May of 430 million euros. to 510 million euros. The second quarter is still profitable, but weaker than expected, Zalando said.

While online retailer sales skyrocketed during lockdowns when people were forced to shop online, that growth has since slowed as normal shopping habits return. Record eurozone inflation is also weighing on consumer confidence.

“After some promising signs of improving consumer demand between late April and May, things appear to have deteriorated considerably in June,” Citigroup analyst Guido Lucarelli said, adding that he didn’t see much upside. hope for a recovery in the second half. half, “and maybe neither in the first half of 2023”.

Asos Plc and Boohoo Group Plc, two of Britain’s biggest e-commerce chains, also reported slowing sales last week in a further sign of consumer distress. Asos cut its profit and sales forecasts while Boohoo recorded the first drop in UK sales in its history as shoppers bought less online and returned more goods.

Zalando has grown aggressively. Last year, when online sales were booming, she hatched a plan to corner a tenth of the European fashion market, estimated at 450 billion euros in the long term.

By Katie Linsell

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