Allegro trims expectations as inflation bites

© Reuters.

GDANSK (Reuters) - Poland's Allegro on Thursday trimmed its 2022 expectations, with higher inflation seen hitting discretionary consumer spending, but said it was better positioned than others to face the headwinds.

The company, which runs Poland's most popular shopping platform, now expects year-on-year revenue growth from its core market at 25%-30%, compared with its earlier forecast of being in the low 30s.

"Allegro really is the place to get good prices ... We are in a better position to withstand tight consumer budgets than most consumer business," Finance Chief Jon Eastick told Reuters.

Eastick said the company was not excluding changes to the pricing of its subscription programme, amid a likely rise in delivery costs, but was optimistic Allegro could keep those cost increases at a "reasonable" level.

Polish parcel locker company InPost said earlier in May that it would most likely implement a two-digit price increase in November for Allegro.

Allegro has also narrowed down its adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) expectations to between 10% and 15% from low-to-mid teens percentage growth earlier.

"For reasons of being prudent, we decided we can't be as confident that the Polish consumer will sail through this and keep buying as we were before," Eastick said.

Jefferies analysts noted, though, the revised guidance was stronger than the sell-side expectations of 9% growth.

"Top-line growth seems to be slowing, albeit it's important to note this comes from inflationary pressures on shopper wallets and not the feared competitive pressures," they said in a note.

Allegro's shares, which fell around 3% at the open, reversed course and were trading 2.7% higher at 0813 GMT

Allegro's first-quarter core profit fell 13.6% to 462.9 million zlotys ($107.60 million), weighed by higher costs. Still, that came above the 448 million zlotys expected by analysts in a company-compiled poll.

Eastick listed pricing, convenience, fast delivery and Allegro's buy-now-pay-later solution as the company's response to inflation-hit shoppers.

($1 = 4.3019 zlotys)