©Reuters. FILE PHOTO: A person with a shopping bag from the Zalando outlet walks along the Kurfuerstendamm shopping street looking for bargains on the second Advent weekend in Berlin, Germany, December 3, 2022. REUTERS/Lisi Niesner/File Photo
By Linda Pasquini and Chiara Holzhaeuser
(Reuters) – German online fashion retailer Zalando on Wednesday forecast a return to growth this year and said it would open its logistics business to more operators, raising hopes of a boost to its performance and helping to lift earnings. his actions.
The stock jumped 18.5% after the company said late Tuesday that it would repurchase up to 100 million euros ($109 million) of shares, starting March 13.
Zalando said on Wednesday it expects growth in gross merchandise value (GMV), a key metric that measures the value of all goods sold, of between 0% and 5% this year, after a decline of 1, 1% to 14.6 billion euros in 2023.
It said it is targeting a 5-10% compound annual growth rate for GMV and revenue through 2028, as it updated strategies for both its fashion/lifestyle business and infrastructure (B2B) business ahead of the Capital Markets Day on Wednesday.
In B2B, Zalando is opening up its logistics network, software and services to help brands and retailers e-commerce transactions, regardless of whether they take place on its platform.
In this way, “Zalando seems to realize that the historical growth story based on the increasing penetration of online fashion is now close to the glass ceiling,” said Clement Genelot, an analyst at Bryan, Garnier & Co.
“In other words, growth potential has been reduced. Hence the shift towards a logistics business to address the issue of overcapacity in its existing logistics network.”
Zalando expects revenue growth of between 0% and 5% again this year, following a decline of 1.9% to 10.1 billion euros in 2023.
“The wider range reflects the continued uncertainty we see in the market,” Chief Financial Officer Sandra Dembeck told reporters.
Zalando, a multi-brand platform that sells clothes, shoes and accessories, is facing weakening demand after a growth boom during the pandemic, as consumers grappling with inflation and high interest rates cut spending and turn to cheaper options offered by fast fashion rivals like China-based Shein.
Its shares rose 15% to 22 euros at 08.23 GMT.
The company expects adjusted earnings before interest and taxes of between 380 and 450 million euros this year, up from 350 million in 2023.
($1 = 0.9153 euros)