After successes during the pandemic years, the online fashion retailer Zalando is increasingly struggling with the significantly lower buying mood of consumers. The Berlin company now wants to cut a few hundred jobs, as Zalando bosses Robert Gentz and David Schneider announced in a letter to employees on Tuesday.
“Many areas of Zalando will be involved in this program, including at management level,” the letter said. It is not yet clear how many jobs will be affected. Discussions with employee representatives had only just begun. Zalando employs 17,000 people.
Zalando experienced extraordinarily positive years as a result of the corona pandemic: online trading was booming, while at the same time consumers were saving elsewhere because, for example, they could no longer go to restaurants or bars. The Zalando bosses wrote that the years 2020 and 2021 brought “extraordinary growth” for Zalando due to “the strong pandemic tailwind”.
Since the normalization of public life, however, growth and, above all, the mood to buy have weakened significantly. Inflation also led to high price increases in the cost of living – ordering clothes became secondary or was no longer possible for many in view of the explosion in electricity and gas costs.
The Dax group already lowered its original targets at the end of June. When presenting the quarterly figures at the beginning of November, Gentz emphasized that it was now less likely that Zalando would then achieve the sales targets set for 2025. So now the job cuts, which should not affect the logistics centers, customer service and branches.
“In recent years, some parts of our business have grown too much and we have introduced a certain level of complexity into our organization, which affects our ability to act quickly,” the letter to employees reads.
The management acknowledges that the company is not yet “where we need to be – and therefore we have to act even more decisively”. The job cuts are a “hard but necessary step” in order to prepare as best as possible for the challenges of the future.
According to Zalando, it has more than 50 million active customers within twelve months in 25 markets. Between July and September, the number of orders rose to 58.5 million. In the third quarter of 2022, sales increased by almost three percent to around 2.35 billion euros. The adjusted operating result (EBIT) improved from EUR 9.8 million to EUR 13.5 million. The bottom line, however, is that the group increased its loss – from 8.4 million to 35.4 million euros. The business figures for the whole of 2022 are to be presented on March 7th.
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