GLOBAL FASHION GROUP REPORTS Q2 2024 RESULTS

Luxembourg, 14 August 2024 – Global Fashion Group S.A. (“GFG”), the leading online fashion and lifestyle destination in LATAM, SEA and ANZ, delivered a significant improvement to profit and breakeven Normalised Free Cash Flow despite ongoing demand pressure in Q2.

Q2 2024 Highlights 

(growth rates at constant currency)

• Net Merchandise Value decrease of 12.3% (Q2/23: 15.3%)
• Revenue decrease of 12.8% (Q2/23: 19.0%)
• Marketplace NMV achieved 38.7% share of total NMV (Q2/23: 38.3%)
• Gross Margin 45.0% (Q2/23: 41.5%) and Adj. EBITDA Margin (2.1)% (Q2/23: (8.1)%)
• Active Customers decrease of 16.7%, Order Frequency decrease of 4.3%
• Pro-Forma Cash of €317m and Pro-Forma Net Cash of €144m*

Christoph Barchewitz, CEO of GFG, said: “Our Q2 results reflect our team’s strength in being able to navigate a challenging market environment and still deliver progress on our commitment to sustainable growth and profitability over the long-term. We are particularly pleased to see continued improvements in our Gross Profit and Adj. EBITDA margins, which highlights the effectiveness of our strategic initiatives underway.”

In Q2 2024, GFG generated €285 million of Net Merchandise Value (“NMV”), a 12.3% decrease yoy. This decrease was driven by a yoy reduction of 16.9% in Orders and 16.7% in Active Customers. Whilst these topline metrics continue to reflect a subdued demand environment, the rates of decline moderated compared to recent quarters. Positive trends in customer reactivation and churn rate are mitigating some of the downward pressure from lower traffic levels. Average Order Value (“AOV”) increased 5.5% yoy which partially offset the impact of reduced volumes on NMV.

In LATAM, Q2 NMV declined 11.1% yoy amidst volatile trading conditions including extreme weather events impacting seasonal demand. In SEA, NMV decreased by 20.4% yoy as Q2 performance was impacted by timing shifts for a key holiday sales event and temporary regulatory changes. In ANZ, Q2 NMV fell by 8.4% yoy. The rate of NMV decline slowed for both LATAM and ANZ compared to Q1.

GFG achieved a Gross Margin of 45.0%, a 3.5ppt increase yoy with improvements delivered in each region. This increase was driven by Retail expansion from lower discounting levels compared to last year and, to a lesser extent, increased participation in Marketplace and Platform Services offerings. Adjusted EBITDA margin gained even more significantly than Gross Margin by increasing 6.0ppt yoy to (2.1)%. This was a result of 2023 and 2024 cost initiatives.

GFG’s ongoing focus on cost efficiency generated a cash flow benefit by delivering a €34 million or 11% reduction in its total cost base.** GFG maintained prudent inventory management and reduced inventory levels by 18% yoy on a constant currency basis. A targeted reduction of inventory older than 180 days reduced aged stock levels by €13 million yoy to represent 21% of gross inventory by the end of H1.

Q2 Normalised Free Cash Flow was €3 million, increasing €8 million yoy driven by the improvement in Adj. EBITDA. GFG closed Q2 with €317 million Pro-Forma Cash and €144 million Pro-Forma Net Cash.

During Q2, GFG repurchased €13 million of its outstanding convertible bond followed by an additional €110 million repurchase as announced on 11th August. These repurchases at significant discounts generate substantial cash savings, strengthen the balance sheet and preserve strong liquidity and financial flexibility for GFG. Post settlement of the latest repurchase, GFG’s Pro Forma Net Cash position would be €160 million.

GFG reaffirms its full year guidance for 2024 and expects NMV to decrease 5-15% on a constant currency basis, implying an NMV of €1.1-1.2 billion. June and July have been the strongest months of 2024 so far in terms of NMV trends yoy. Adjusted EBITDA is expected to be €(25)-(45) million for the full year. GFG will continue its focus on delivering profitability and cash flow improvements to progress toward becoming a financially sustainable business.

KEY FINANCIAL METRICS

KEY CASH METRICS

KEY PERFORMANCE INDICATORS 

FURTHER INFORMATION

KPI and financial definitions, including alternative performance measures are available in the 2024 Half-Year Report. 

–ENDS–

*Pro-Forma Cash is defined as cash & cash equivalents at the end of the period, short term duration bonds and securitised funds plus restricted cash and cash on deposits. Pro-Forma Net Cash is Pro-Forma Cash excluding third party borrowings and convertible bond debt.

**Total cost base includes expenses related to fulfilment, marketing, technology (including capital expenditure), admin (excluding share-based payments) and cash lease payments net of sublease income.

***Normalised Free Cash Flow (“NFCF”) represents operating cash flows excluding discontinued operations, exceptional items, changes in factoring principal, interest and tax on investment income and convertible bond interest.