By Leah Montebello
European fashion giant Zalando chief has said the company is turning to marketing cuts rather than job cuts as the sector grapples with a consumer spending slowdown.
In an interview with theFinancial Times, co-founder Robert Gentz said that the Berlin-based clothing giant would not be axing staff like its retail rivals.
While he said the firm has been “more cautious in hiring”, he told the FT: “Our plan is to keep employment by the end of this year steady.”
The businessman added that Zalando, which has a European customer base of around 49 million, has been able to offset many of the price rises by focusing on profitability and scaling back marketing spend.
He told the paper that the company has also reduced free shipping offers to limit loss making small orders.
It comes as the pandemic boom of online shopping continues to fade for many retail giants and more and more customers are forced to limit spending.
Major UK players are also feeling a similar sting to their European cousins. Asos warned back in June that it was is expecting lower profit this year after an increase in customers returning clothes.
Likewise Boohoo also posted its first UK sales drop in the fast fashion retailer’s history, pointing to supply chain disruption and a struggle to be competitive with international players.
Earlier this month, Zalando said that second-quarter sales fell four per cent to €2.6bn (£2.2bn), citing lower consumer confidence and inflationary pressures as the impetus.
However, the Frankfurt listed firm said adjusted earnings before interest and tax (EBIT) hit €77.4m, down 58 per cent year-on-year but up from a first-quarter loss of €52m back in May.
“Our foundation is very strong. We expect a return to growth and profitability,” Gentz said earlier this month.
Zalando shares have fallen nearly 60 per cent in the year to date.
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