Germany's Otto Group's revenue drops by 6% in 2023-24

In addition to consumer sentiment, which is still somewhat depressed, the deliberate and intentional focus on profitability and liquidity in the management of the group also had an impact on revenue performance, not least due to the very relevant savings in the marketing budget and a correspondingly reduced customer contact. Systematic portfolio measures, in particular the discontinuation of the unprofitable companies of Mytoys and Unigro during the year, led to a further noticeable drop in sales.

In the largest segment, platforms, which includes Otto and About You, the trend is encouraging. The marketplace business with external partners launched by Otto in 2020 continues to grow dynamically, and investments in Otto's transformation into a platform are paying off. Otto's Gross Merchandise Value (GMV), i.e. the total gross value of all purchases in the Otto app and on official channel, grew by almost 2 per cent in the 2023-24 financial year compared to the previous year – a clear demonstration of the attractiveness of the Otto platform. The GMV of external partners rose by around 50 per cent. In the past financial year, Otto was also able to increase the number of marketplace partners by 33 per cent to more than 6,500. One-third of platform revenue now derives from marketplace business.

The About You Group was able to meet its annual forecasts both for revenue growth – an increase of 1.6 per cent compared to the same period of the previous year – and for profitability in 2023-24. Despite the uncertain market environment, the e-commerce group of companies broke even with an adjusted EBITDA.

“We are seizing the opportunities arising from the use of artificial intelligence in all business processes and across all Group companies. We were and still are staunch fast movers in this field of innovation in the retail sector. The strategic use of this disruptive technology is of paramount importance for the future viability of the Otto Group. AI helps us to become even better and faster, to save costs and, above all, to make shopping even more convenient, personal and attractive for our customers,” CEO Alexander Birken said.

In the coming years, the Otto Group intends to further strengthen its commitment to protecting the environment and nature, which has been anchored in its corporate goals for decades, and to justify even more the group’s claim to provide responsible commerce. This is all based on new, highly ambitious targets as the Group's contribution to fight climate change, officially validated by the Science Based Targets Initiative (SBTi) at the end of February. This includes the group’s aim to reduce its absolute greenhouse gas emissions by 42 per cent by the end of the 2031-32 financial year compared to 2021-22. The Otto Group is therefore making a tangible and measurable contribution to limiting global warming. The SBTi has certified that the Otto Group’s targets are not only scientifically sound and in line with the 1.5 degree target approved at the Paris Climate Agreement, but also meet the highest standards, the company said in a press release.

Since the start of the 2024-25 financial year, the group has officially been managed in line with the new SBT target architecture. From the new financial year, the science-based target (SBT) and the long-term transformational goal of achieving net-zero emissions across the entire value chain of the retail and services group by 2045 will therefore completely replace the previous climate targets laid out in the group's CR strategy. The previous climate targets have been incorporated into the new SBT target architecture.

“We are very determined to drive the sustainable transformation of the industry forward. This is exactly what we are demonstrating by having our ambitious climate targets validated. The SBT gives us the big picture when it comes to greenhouse gas emissions across our entire value chain – from the cultivation of raw materials and production to the use phase and the final disposal of goods. What makes this unique in the competitive environment is the integration of the marketplace business into the setting of targets. We are therefore also taking responsibility for the emissions of our marketplace partners and are going far beyond the minimum requirements for successful validation as well as the standard practice of our competitors. We are committed to sustainable change in our business and in society,” added Birken.

Given that the market environment remains challenging and uncertain, the Otto Group anticipates that revenue will remain stable, and that profitability will significantly increase in the current 2024-25 financial year. The group will maintain its focus on profitability and liquidity. This will lay the foundation for returning to growth in subsequent financial years and increasing economic performance.

“During the crisis, we successfully focused on the key challenges and, not least, took very robust portfolio measures. We aim to achieve a significant improvement in the operating result in 2024-25. We expect EBIT to increase to a lower mid-triple-digit million figure. Maintaining financial stability will remain one of our most important goals in the future,” concluded Birken.

Fibre2Fashion News Desk (RR)