EQS-News: GLOBAL FASHION GROUP REPORTS Q3 2024 RESULTS

GLOBAL FASHION GROUP REPORTS Q3 2024 RESULTS

Luxembourg, 14 November 2024 - Global Fashion Group S.A. (“GFG”), the leading online fashion and lifestyle destination in LATAM, SEA and ANZ, significantly improved its Q3 profit through a combination of operational efficiency efforts and expanded Gross Margin.

Q3 2024 Highlights (growth rates at constant currency)

• Net Merchandise Value decrease of 3.8% (Q3/23: 19.4%)
• Revenue decrease of 3.0% (Q3/23: 25.0%)
• Marketplace NMV share reduced slightly to 38% of total NMV (Q3/23: 39%)
• Gross Margin 44.6% (Q3/23: 42.1%) and Adj. EBITDA Margin (4.7)% (Q3/23: (9.7)%)
• Active Customers decrease of 13.5%, Order Frequency decrease of 3.9%
• Pro-Forma Cash of €189m and Pro-Forma Net Cash of €128m¹

 

Christoph Barchewitz, CEO of GFG, said:

“As we enter our peak trading period, I’m pleased by the substantial improvements in gross margin and profitability we’ve achieved year-to-date. Our Q3 results highlight our commitment to operational efficiency and ability to capitalise on returning consumer demand. We’re encouraged by our improving customer and topline indicators and are focused on executing our key Q4 events to finish the year strongly.”

 

In Q3 2024, GFG generated €264 million of Net Merchandise Value (“NMV”), decreasing 3.8% year-over-year (“yoy”). This represents the slowest rate of decline achieved in two years and is significantly better than the declines seen in Q1 and Q2 of this year. The rate of yoy decline in Active Customers and Orders also slowed to (13.5)% and (11.4)%, respectively, reflecting positive momentum in reactivated customers and a reduced churn rate.

 

In LATAM, Q3 NMV declined 1.3% yoy, achieving its slowest rate of NMV decline since Q2 2021. LATAM also delivered the strongest Adjusted EBITDA margin improvement among the three regions. In SEA, NMV decreased by 12.1% yoy, showing a slower rate of decline compared to recent quarters but still facing challenges due to a highly competitive pricing environment. In ANZ, Q2 NMV fell by 0.9% yoy, achieving its slowest rate of NMV decline since Q1 2023. ANZ is the first region where new and reactivated customers outpaced churned customers since its downturn began. In Q3, our two largest markets, Brazil and Australia, have achieved this turning point.

 

Gross Margin increased by 2.5ppt to reach 44.6%, driven by stronger Retail margins through lower discounts and a more efficient inventory profile across all regions. This margin expansion, combined with successful cost initiatives, resulted in a 5.0ppt improvement in our Adjusted EBITDA margin. Our absolute Adjusted EBITDA improved by €10 million to a loss of €8 million.

 

GFG’s ongoing cost efficiency initiatives resulted in a total cost base reduction of €8 million, or 7% yoy, on a constant currency basis.² This Q3 reduction was primarily driven by cost initiatives implemented earlier this year, with fewer volume and annualisation cost benefits than those realised in H1 2024. GFG’s inventory position remains healthy and fresh entering Q4, its largest trading quarter. Inventory levels were down 19% yoy on a constant currency basis and stock older than 180 days reduced 5ppt yoy to represent 17% of gross inventory at the end of Q3.

 

Q3 Normalised Free Cash Flow (“NFCF”) was flat compared to last year, with a seasonal outflow of €33 million.³ Year-to-date, GFG’s NFCF improved by €10 million as the benefits of an improved Adj. EBITDA by €29 million helped to offset the less favourable working capital cash flow and slightly elevated capex.

 

GFG closed Q3 with €189 million Pro-Forma Cash and €128 million Pro-Forma Net Cash. Year-to-date to Q3, GFG has successfully repurchased €124 million of its outstanding convertible bond at a discount to par resulting in a €20 million saving on future principal repayments. GFG remains open to considering other opportunities to repurchase the remaining €55 million of outstanding bonds.

 

For full-year 2024, GFG’s guidance expectations are unchanged from the update issued on 16th October 2024. GFG expects an 8-12% decrease in NMV on a constant currency basis. This implies an expected NMV range of €1,100 to €1,160 million when accounting for year-to-date exchange rate movements. Our October results indicate a continuation of the topline recovery trend, with NMV performance showing a single digit decline yoy. For full-year Adjusted EBITDA, GFG expects a range of €(16) to €(28) million.
 

€m, unless stated otherwise
Key Financial Metrics	Q3 2023	Q3 2024	YTD 2023	YTD 2024
NMV	283.9	264.0	909.9	787.9
% Constant Currency Growth	(19.4)%	(3.8)%	(14.3)%	(10.9)%
Revenue	184.5	173.7	594.9	511.2
% Constant Currency Growth	(25.0)%	(3.0)%	(18.5)%	(11.6)%
Gross Profit	77.7	77.5	247.0	227.9
% Margin of Revenue	42.1%	44.6%	41.5%	44.6%
EBIT	(34.6)	(23.6)	(108.5)	(74.6)
Adjusted EBITDA	(17.8)	(8.2)	(58.7)	(29.3)
% Margin of Revenue	(9.7)%	(4.7)%	(9.9)%	(5.7)%
Key Cash Metrics	Q3 2023	Q3 2024	YTD 2023	YTD 2024
Pro-Forma Cash1	350.1	189.0	350.1	189.0
Pro-Forma Net Cash1	158.0	128.1	158.0	128.1
Normalised Free Cash Flow3	(33.5)	(32.9)	(100.2)	(90.7)
Cash Capital Expenditure	7.6	9.2	21.6	15.8
Key Performance Indicators	Q3 2023	Q3 2024	YTD 2023	YTD 2024
Active Customers (m)	9.2	8.0	9.2	8.0
% Growth	(19.1)%	(13.5)%	(19.1)%	(13.5)%
Number of Orders (m)	4.6	4.1	14.9	12.5
% Growth	(26.0)%	(11.4)%	(24.4)%	(15.6)%
Order Frequency (x)	2.4	2.3	2.4	2.3
% Growth	(3.8)%	(3.9)%	(3.8)%	(3.9)%
Average Order Value (€)	61.4	64.4	61.3	62.8
% Constant Currency Growth	9.0%	8.6%	13.4%	5.5%

 

1. 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.
2. 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.

3. 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.

 

 

FURTHER INFORMATION

KPI and financial definitions including alternative performance measures are available in the

2024 Half-Year Report. 

 

For inquiries, please contact:

Saori McKinnon

Head of Investor Relations & Communications

investors@global-fashion-group.com

press@global-fashion-group.com

 

Forward-looking Information

This announcement contains forward-looking statements. Forward-looking statements should not be construed as a promise of future results and developments and involve known and unknown risks and uncertainties. Various factors could cause actual future results, performance or events to differ materially from those described in this announcement, and neither the Company nor any other person accepts any responsibility for the accuracy of the opinions expressed in this announcement or the underlying assumptions.

 

About Global Fashion Group

Global Fashion Group (“GFG”) is the leading fashion and lifestyle destination in LATAM, SEA and ANZ. GFG exists to empower its people, customers and partners to express their true selves through fashion. GFG’s three ecommerce platforms - Dafiti, ZALORA and THE ICONIC - offer a curated assortment of international, local and own brands to a diverse market of 800 million consumers. Through a seamless and inspiring customer journey, powered by a blend of data-driven insights and local expertise, GFG’s platforms deliver an exceptional customer experience from discovery to delivery. GFG’s vision is to be the #1 fashion & lifestyle destination in its markets, and is committed to doing this responsibly by being people and planet positive across everything it does. (ISIN: LU2010095458)

 

For more information visit: www.global-fashion-group.com