Shares in fashion e-tailer Zalando tumbled almost 16% this morning (18 September) as the Berlin-based company lowered its full-year outlook for the second time in as many months.
In a statement, Zalando said the extended and unusually hot summer period and a delayed switch to the autumn/winter season weighed on revenue growth and adjusted EBIT.
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By GlobalDataAs a result, for the fiscal year 2018, Zalando now expects revenue growth around the low end of its 20%-25% target growth corridor (previously forecast in the lower half of such corridor) and an adjusted EBIT of EUR150m-EUR190m (previously expected at the low end of a EUR220-EUR270m target range). Capital expenditure and net working capital guidance remain unchanged.
For the third quarter, meanwhile, management expects revenue growth and adjusted EBIT to be “significantly below” analyst estimates of 19.8% revenue growth and minus EUR2m, respectively.
“August and September 2018 have been characterised by continued high temperatures across Europe, reducing consumer demand as demonstrated by shrinking fashion sales in the overall market during this period and leading to higher discounts than in the previous year,” Zalando said. “In addition, high temperatures delayed the start into the fall/winter season, with typically full price and higher margin merchandise at the beginning of the season.”
Despite such challenging market conditions, Zalando said it continues to outperform the overall fashion market “significantly” as its long-term growth indicators such as the partner programme share and the number of active customers continue to develop positively. This is in-line with the company’s long-term strategy to invest into market share gains. However, higher discounts and higher fulfilment costs currently impact profitability.
“While current trading in the third quarter clearly does not reflect our ambition, our growth story remains intact,” added Zalando co-CEO Rubin Ritter. “Despite the challenging market environment, we continue to invest in growth and remain committed to our target of doubling the business by 2020.”
