German online clothing retailer Zalando is coming under increasing pressure from declining customer demand. That is why, after successful pandemic years, he now has to cut several hundred jobs.
“Many areas of Zalando will be involved in this program, including at the management level,” said Zalando bosses Robert Gentz and David Schneider in a letter to employees on Tuesday. It is not yet clear how many jobs are involved. Discussions with workers’ representatives had only just begun. Zalando employs 17,000 people.
Downturn after extremely successful pandemic years
Zalando experienced extremely positive years as a result of the corona pandemic: online trade boomed, while consumers elsewhere were saving 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 tailwind of the pandemic”. However, since the normalization of public life, growth and, in particular, the desire to buy have declined considerably. Inflation also led to high price increases in the cost of living.
The DAX group lowered all of its original targets at the end of June. At the presentation of the quarterly figures in early November, Gentz emphasized that it was now less likely that Zalando would meet the stated sales targets for 2025. So now the job losses, which should not have any consequences for the logistics centers, customer service and branches.
“Difficult but necessary step”
“In recent years, some parts of our business have grown too much and we have brought a certain level of complexity into our organization, which affects our ability to act quickly,” the letter to employees reads. Management acknowledges that the company is not yet “where we need to be – and that is why we need to act even more decisively”. The job cuts are a “hard but necessary step” to prepare as best we can for the challenges of the future.
Zalando claims to have had more than 50 million active customers in 25 markets within 12 months. Between July and September, the number of orders rose to 58.5 million. In the third quarter of 2022, turnover 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. However, the bottom line is that the group increased its loss – from EUR 8.4 million to EUR 35.4 million. The company figures for the whole of 2022 will be presented on March 7.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
