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German retailer Zalando to cut ‘hundreds of jobs’

German online fashion retailer Zalando said Tuesday it plans to cut hundreds of jobs to help it confront a "more challenging" economic environment after years of rapid growth.

Zalando packages.
Zalando packages. Photo: picture alliance / dpa | Jörg Carstensen

“We have decided to start a program that will remove several hundred overhead roles across many of our teams,” co-chief executives David Schneider and Robert Gentz said in a letter to staff.

The Berlin-based company, which operates in 25 European countries, currently has a workforce of around 17,000 people.

Zalando benefitted from a boom in e-commerce during the coronavirus pandemic, when lockdowns prompted customers to do more online shopping.

But those “strong pandemic tailwinds” have faded since 2022, Zalando said, “and the macroeconomic environment has become more challenging” as high inflation sees customers cutting back on spending.

At times, the company “expanded too much”, the co-CEOs added.

Zalando needs to be “a big company with a small company structure and mindset,” they said, one that “embraces simplicity, pragmatism and frugality”.

Details of the jobs cull are still being worked out, they added, but would include senior-level positions.

Jobs in customer care, logistics centres and at the company’s outlet stores would not be affected.

Founded as a Berlin start-up in 2008, Zalando quickly rose to become Europe’s leading online fashion and lifestyle retailer.

But the company was forced to issue a profit warning last June after drastically downgrading its full-year earnings forecasts.

The group is due to announce its 2022 results next month.

Revenues are forecast to stay roughly unchanged at 10.4 to 10.7 billion euros ($11.0-11.4 billion), while pre-tax profits of 180-260 million euros are expected, significantly below the previous year’s 468 million euros.

The Zalando job cuts are the latest in a wave of layoffs in the global tech industry, as the once unassailable sector girds for a downturn.

German software giant SAP said last month it would slash around 3,000 jobs this year, following similar announcements by the likes of Meta, Amazon, Google and Microsoft.

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INDUSTRY & TRADE

German arms maker to hire workers from ailing auto firm

German weapons manufacturer Rheinmetall, whose business has boomed amid the Ukraine war, is set to hire workers from Continental as the auto supplier cuts thousands of jobs, the companies said on Friday.

German arms maker to hire workers from ailing auto firm

The defence group Rheinmetall has seen demand soar as countries rush to re-arm following Russia’s invasion of Ukraine.

It is setting up new factories and said in March it was targeting a record €10 billion in sales this year.

In contrast Continental, which makes tyres and supplies car components, is in the process of cutting over 7,000 jobs worldwide as it faces intense competition and the tricky switch to electric vehicles.

The companies said they had inked an agreement “to partly cover Rheinmetall’s fast-growing personnel requirements in the coming years with Continental employees affected by the transformation” in the auto sector.

As a first step, up to 100 employees from Continental’s Gifhorn plant in northern Germany, which is set to close in 2027, will get jobs with Rheinmetall at a nearby site, they said.

Events will be organised at other sites in Germany at which staff can find out about career opportunities at Rheinmetall.

Rheinmetall is the third company that Continental has signed up to its initiative to help staff find new jobs.

READ ALSO: EXPLAINED – Which German companies are planning to cut jobs?

“The profound changes in all industries can only be tackled together,” said Continental human resources boss Ariane Reinhart.

Peter Sebastian Krause, who oversees human resources at Rheinmetall, said Continental was an “excellent match” for the defence group.

Rheinmetall is expecting sales growth of up to 40 percent in the current financial year. Soaring demand means the company needs to hire staff quickly, at a time when Germany is suffering from shortages of skilled labour. 

In a country still haunted by post-War War II guilt, Germany’s weapons manufacturers were for years not the most celebrated firms.

Europe’s top economy preferred to highlight its well-known carmakers or industrial giants.

That has started changing since Russia invaded Ukraine in 2022, as demand for military equipment boosts the arms industry’s fortunes.

READ ALSO: What a Russian victory in Ukraine would mean for Germany

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