German online fashion retailer Zalando said on Monday it was trimming spending and investment as coronavirus lockdowns hit its sales and profitability, while it would speed up an initiative to help currently closed stores to sell online.
“We have seen a negative impact on sales since the lockdowns in several countries. This is also affecting our bottom line,” the Zalando management board said in a letter.
Europe’s biggest pure online fashion retailer said it was reacting by adjusting spending and investment, but added it was less affected than many in the industry, noting it currently had a cash balance of more than 1 billion euros ($1.10 billion).
It is planning to waive its commission fee for all new and existing physical stores that sell their goods on its platform from April 1 to May 31, while also earmarking 100 million euros of cash to pay early for goods and services already received.
Zalando said it is already helping more than 1,500 bricks-and-mortar stores to sell via its site: “We are now accelerating this initiative to support brands and retailers to uphold at least a part of their business.”
Stores have been closed across Europe to try to contain the coronavirus and some retailers are also scaling back or halting their online activities to try to safeguard workers’ health.
Zalando said in a statement it expects first-quarter sales and earnings before interest and taxation (EBIT) to be significantly below an analyst consensus of March 11 and it assumes it cannot achieve the full-year forecast it gave on Feb. 27.
Zalando had previously forecast sales growth of 15-20% for 2020, down from 20.3% in 2019.
Zalando said it would give further information in a trading statement on April 16, but would postpone its annual general meeting scheduled for May 20.