Post-crisis recovery under way at Global Fashion Group, Q2 is strong

By

Sandra Halliday

Published
Jul 10, 2020

Global Fashion Group released preliminary Q2 figures on Friday and said that it expects the period to be its second profitable quarter on an adjusted EBITDA basis, as well as its first cash flow-positive three months.

The positive development comes as a result of “strong customer demand recovery since the end of April, and the company’s strategic response to the Covid-19 pandemic,” it said.

It’s expecting the quarter to end with net merchandise value (NMV) growth on a constant currency basis of above 20%, despite the virus impact in April, driven by more than two million new customers.

The company operates webstores such as The Iconic, Zalora, Dafiti and La Moda in Asia Pacific, Latin America and Eastern Europe. They sell own labels, as well as major brand names under partnership deals from Mango to Dorothy Perkins, Lee, Topshop, Guess and many more.

It’s predicting its adjusted EBITDA profitability will be due to a strong gross margin and “significantly better marketing efficiency”.

The company also said it has seen improved Marketplace share of more than 30% (up from 19% in Q2 2019) and around 90% Marketplace NMV growth “as a result of category mix shift and increased Marketplace SKU share”.

The company added that profitability, alongside disciplined working capital management and capital expenditure, resulted in strong cash generation and a pro-forma cash balance at 30 June of around €260m, up €50m from the end of March.

Co-CEOs Christoph Barchewitz and Patrick Schmidt said: “This strong financial performance is a direct result of the agility and adaptability of the GFG teams around the world. Over the last few months, customer acquisition, Marketplace share growth and brand relationships have been accelerated. In this way, we have continued to execute against our strategic priorities with a focus on capturing the significant fashion and lifestyle e-commerce opportunity in our markets.”

They added that the firm saw “a strong recovery in sales from late April", with order intake up over 30% since the start of May compared to the same period last year. This was driven by “strong performances in CIS and LATAM, while APAC saw more moderate growth as a result of soft trading in Australia”.