Zalando forced to axe jobs as retailer admits it expanded ‘too much’
Online fashion retailer Zalando will axe hundreds of job roles across its team, after an over-hiring spree during the pandemic and a challenging economic climate has rattled the business.
The German-based group, which sells a range of brands such as Adidas and Nike, said that over the last few years it had expanded some parts of its company “too much”.
Zalando said the global pandemic, which forced consumers to turn to online shopping due to social lockdowns, helped the company generate “exceptional growth” over the last few years.
However, Zalando said the “pandemic tailwinds” had faded since 2022 and the macroeconomic environment had become more challenging.
“Instead of a big company with a big company structure and mindset, we need to be a big company with a small company structure and mindset,” said Robert Gentz and David Schneiderd, co-CEOs of Zalando.
The pair, who manage a workforce of some 17,000, did not specify which areas would be impacted by the cuts.
“This program will involve many parts of Zalando, including at the senior leadership level,” they added.
In November, the group forecast revenue would grow between zero per cent and three per cent to €10.4bn to €10.7bn with an adjusted ebit of €180m to €260m. However, the company said it expects to reach the lower end of these ranges.
Wizz Selvey, retail expert and founder & CEO of Wizz&Co, told City A.M: “For many years investments have been made into businesses based on fast sales and customer growth without profit. Although the cost of living crisis has been cited as one of the reasons for Zalando’s tricky financial situation, is it really the problem that more investors are changing their opinion on what success looks like.
“The question is, can Zalando continue to grow in the retail space in the wake of the pandemic, now that profits have slowed? Customer care, an area that will reportedly be unaffected by the job cuts, will be an important area to focus on in the wake of this news, for both stakeholders and shareholders, as well as shoppers themselves.”