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A mood of crisis is now setting in at the Otto Group

After the extremely good business years during the corona pandemic, the signs at the Hamburg Otto Group are now pointing to a crisis, despite largely stable online sales.

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A mood of crisis is now setting in at the Otto Group

After the extremely good business years during the corona pandemic, the signs at the Hamburg Otto Group are now pointing to a crisis, despite largely stable online sales. "Our result will definitely decrease very significantly," said Group Management Board member Sebastian Klauke on Wednesday in Hamburg. The costs for raw materials, for energy, for logistics have risen noticeably. "At the same time, we were and are aware that we cannot pass these cost increases on to our customers one-to-one." In addition, there have been numerous discount battles over the past few months, particularly in the fashion and furniture sectors. "Of course, this has a massive impact on our margin."

In order to compensate for this, the group will pay even more attention to costs in the next financial year, which begins on March 1st, and will not give up strategically necessary investments - "we are not stopping now because we are having a crisis year" - but they would stretched in one place or another. Klauke also did not rule out job cuts. "I don't want to make any dubious exclusion statements here in such a volatile time as now. But you can be sure that we will not lightly part with employees that we might need again in a few months."

Klauke said that according to an initial forecast for the 2022/23 financial year ending next week, the Otto Group will report global online sales of around 12.1 billion euros. Compared to the 2021/22 financial year, this is a decrease of around two percent. According to the information, Otto recorded a significant decline of eight percent to almost 7.5 billion euros in Germany, while in other countries that were less economically affected, an increase of eight percent to around 4.6 billion euros was achieved. The Otto Group intends to publish the overall result for the financial year in May.

Basically, the Otto Group is satisfied with the online sales, they are clearly above those of the pre-Corona years. However, the plans were different. "Like all of our competitors, our plans looked completely different after two very successful years in which we were able to increase our online growth by well over 30 percent." Klauke recalled the forecast of the Federal Association of E-Commerce and Mail Order (BEVH ) for 2022, according to which e-commerce sales should grow by 12 percent to 111 billion euros. "That was the basis on which we (...) drew up our plans for the current financial year."

With the start of the Russian attack on Ukraine, however, these all became obsolete. With the beginning of the war, the consumer climate collapsed immediately. Added to this was high inflation and high prices for food, energy and mobility. "All of this has led to much more cautious purchasing behavior on the part of consumers, especially in Germany and the EU," said Klauke. There were significant declines of ten percent, especially in the electronics and household appliances sectors. But the otherwise very profitable "Home and Living" area also recorded a serious slump of 14 percent in Germany. The fact that a plus was finally achieved there is thanks to the North American business.

For the coming 2023/24 financial year, the Otto Group expects low, single-digit growth in e-commerce. "And that's a conservative forecast," said Klauke. The reason is the war in Ukraine with the unforeseeable effects on economic development in Germany and the world. In addition, high inventories would still have to be sold off via discounts. One ray of hope, however, is that the number of customers has risen from 58.3 to more than 59.4 million.

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