Klarna Cuts Outlook on German Retail Slump
Klarna financial projections, German retail decline, US market growth
Key Highlights
Klarna revises full-year forecasts downward due to a weakening German retail market, despite a surprising Q2 profit driven by US growth.
Klarna, the Swedish ‘buy now, pay later’ provider, has revised its full-year volume and revenue forecasts downward. This adjustment primarily stems from challenging retail conditions across Germany, its largest market.
The announcement led to a 17% drop in Klarna’s shares during premarket trading. Despite this negative outlook, the company reported a surprising second-quarter profit, reversing a prior loss.
Klarna posted a $9 million profit in Q2, a significant turnaround from a $53 million loss in the same period last year.
This profit was substantially bolstered by robust growth within the U.S. market.
Revised Financial Projections
Klarna now projects a reduced full-year gross merchandise volume (GMV) and revenue, reflecting market pressures. These new figures fall below earlier expectations and analyst predictions.
Full-year GMV is projected between $149 billion and $151 billion, down from the previous forecast of over $155 billion.
Full-year revenue expectations are set between $4.08 billion and $4.16 billion, a decrease from the earlier $4.34 billion.
Analysts had anticipated a higher revenue of $4.42 billion.
German Market Downturn
The weakening German retail sector demonstrates minimal real growth, a trend expected to continue. A recent survey highlights the deteriorating business sentiment among retailers there.
German retail saw less than 1% growth in real terms during the first half of the year.
A survey indicated 42% of 600 German retail companies rated their current business situation as poor.
Nearly two-thirds reported conditions deteriorating compared to the first half of 2025.
Second Quarter Performance
Despite the broader challenges, Klarna’s second-quarter performance showed strong gains in specific areas, particularly in the United States. and GMV figures for the quarter exceeded some projections.
Second-quarter revenue increased by 27% to $1.04 billion, surpassing expectations of $993.8 million.
GMV for the quarter rose by 18% to $36.6 billion.
The United States alone saw a notable 27% increase in GMV during Q2.
This revised outlook underscores the uneven nature of growth in the ‘buy now, pay later’ sector, where regional economic shifts significantly impact global financial projections.