Global Fashion Group revenues up in Q1, Q2 has started well
May 14, 2020
International e-tailer Global Fashion Group (GFG) said on Thursday that its new financial year got off to a good start. The first quarter (which ended on March 31) saw net merchandise value (NMV) rising by 13.1% on a constant currency basis to €372.1m.
And despite a dip during March, recent weeks have been strong as locked-down and socially-distanced shoppers have bought into its expanded loungewear offer.
For the quarter, revenue growth was 8.1% (also on a constant currency basis) taking it to €271.4 million. This reflected a growing proportion of transactions coming through the Marketplace, which accounted for 25% of Q1 NMV. The gross margin for the quarter was 40.6%, up 300bps. But adjusted Ebitda was a loss of €22.7 million compared to €25.5 million a year earlier.
Order numbers rose 7.5% to 7.4m, with a 5.2% increase in average order value. Customers bought 2.7% more often at 2.6 times per year, the 10th consecutive quarter in which it saw increased frequency.
And active customers increased by 15.5% to 13.3m, with NMV per active customer up 3.9% to €136.3.
Co-CEOs Christoph Barchewitz and Patrick Schmidt said: "GFG has had a good start to the year, trading in line with our expectations until mid-March. We have continued to deliver against our strategic priorities, with strong growth across NMV, revenue, frequency, active customers and order, while improving profitability.”
And they added that the owner of the Zalora, The Iconic, Dafiti, and Lamoda brands was “prepared for the strong growth we have seen in the last three weeks and continues to build on the accelerating demand for e-commerce consumption in our markets.”
Those markets include countries in Asia, Latin America and Eastern Europe — all of them with huge growth potential compared to many more mature markets.
Given the wide variety of markets in which it operates, it’s understandable that Covid-19 has been a feature of its trading for just about the whole year. But it was still trading in line with management expectations until mid-March, which was the hardest-hit month.
GFG measures customer demand by the order intake — the total value of customer orders — and the weekly order intake declined for three weeks in late March and early April. It started to recover in the second week of April and then accelerated strongly in the second half of April and early May, with growth around 40% compared to last year for the last three weeks to May 10.
The company also said that “once the initial shock of lockdown passed, customers returned to GFG platforms but with different needs, and an increased demand for categories like sport, wellness and loungewear — while categories like dresses or formalwear saw significant declines”.
As demand for certain categories has increased, GFG has adjusted its assortment accordingly “to bring the most relevant products to customers”. This includes accelerating rollouts of planned new product ranges and introducing new essentials categories “to support well-being and lifestyle needs at home”.
So it’s no surprise that in Q1, it experienced a significant increase in new customers trying its services for the first time. In April, the group acquired more than 650,000 new customers, almost 50% more than in that month last year.
And it added that with the accelerated consumer shift from offline to online, “innovations in technology have never been more important”. GFG continues to strengthen its app-first approach “by adapting communications to inspire and support customers who are spending significantly more time at home”. Its apps also generated 58% of NMV, up from 46% a year ago.
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