Zalando has announced a new strategy as it bids to get back on a growth trajectory. (Photo by Jeremy … [+] Moeller/Getty Images)
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German online fashion retailer Zalando has outlined a strategy to return to growth this year after being hit by challenging market conditions post-pandemic.
While Zalando – like many online retailers – enjoyed a surge in sales during the global lockdowns, a return to normality post-pandemic has seen sales tail off and increasing competition from fashion discounters.
As a result, Zalando – a multi-brand Berlin-based platform that sells apparel, footwear, and accessories and has enjoyed phenomenal growth since its foundation in 2008 – announced that it was opening up its logistics business to more players.
The stock increased by as much as 18.5% after the company made the announcement late Tuesday that it would also buy back up to $109 million of shares, starting March 13, before falling back slightly. Currently its share price is up around 14% since the announcement, and 4% year to date. However, its stock price is still off nearly 40% over the past 12 months.
Zalando said that it expected gross merchandise value (GMV) growth, which it identified as a key metric in evaluating the value of all merchandise sold, of between 0% and 5% this year, after a 1.1% decline to just under $16 billion in 2023.
The e-commerce giant added that it was targeting a compound annual growth rate of 5-10% for GMV and revenue through 2028, as it updated strategies for both its fashion/lifestyle business and its infrastructure business ahead of its capital markets day today.
Zalando B2B Channel
Zalando is opening up its business to business (B2B) logistics network, software and services to supportp the e-commerce transactions of brands and retailers regardless whether they take place on its platform. The company also expects revenue growth of 0% to 5% this year, after a 1.9% drop to just over $11 billion in 2023.
“Our ambition is to return to strong growth and continue our margin expansion, as reflected in our new mid-term guidance,” Zalando co-CEO Robert Gentz 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.
Zalando is bolstering its B2B channel as part of the new strategy. (AP Photo/Michael Sohn)
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“In B2B, we will power the businesses of partners and merchants on and off Zalando, leveraging our unique logistics infrastructure, software and services.”
For its consumer-facing activities, it said it would differentiate itself through “quality to offer the best possible shopping experience in fashion and lifestyle, enhancing its role in customers’ lifestyle journeys,” and by elevating existing categories such as sports and kids and family to distinct propositions.
One such initiative was announced in December, when Zalando introduced an exclusive shopping experience for ‘hyped’ products, those items only available with limited quantities, such as special editions, but high demand, that usually sell out within minutes. All customers can now request an invitation in the Zalando app to make sure they don’t miss these products.
The company also said that it expects adjusted earnings before interest and tax of circa $416 million to $492 million this year, up from around $383 million in 2023.
