Europe's Global Fashion Group's revenue at €276.2 mn in Q3 2022

The company’s marketplace NMV achieved 32.5 per cent share of total NMV compared to 36.2 per cent in Q3 FY21. Its gross margin reached €113.6 million, up 41.1 per cent compared to €101.1 million in Q3 FY21. Adjusted EBITDA margin was up 5.8 per cent to €16 million from €14 million in Q3 FY21, the company said in a media release.

Gross margin has been impacted by 1.8 percentage points related to discounting in preparation of the new season. GFG’s inventory position is healthy, 9 per cent higher than last year (on an FX neutral basis) and is also relatively fresh with just over 20 per cent of stock over 180 days.

In Q3, GFG delivered NMV of €399 million, up by 1.7 per cent year over year (YoY) despite the challenging market conditions. The group adapted to the subdued levels of demand with a focus on inventory levels and actions on costs to preserve profitability. The group has 11.9 million active customers, down 11.1 per cent YoY reflecting deliberate reduction in marketing investments. NMV per active customer was up by 19.4 per cent because of higher average order value (AOV), also up 19.4 per cent. AOV was driven by a higher number of items per order with product and country mix shifts also increasing this metric.

This quarter, revenue grew ahead of NMV. GFG’s marketplace share has trended down from last year to 32.5 per cent of NMV, reflecting some curation of the Marketplace sellers in LATAM alongside customers’ preference to shop our Retail promotions.

In LATAM, NMV declined 13 per cent. LATAM continues to rationalise marketing to focus on stronger returns, at the expense of bringing in fewer new customers in the short term. SEA’s NMV declined 8 per cent reflecting a continued focus on premium and less so on our lower price point assortment which has impacted sales over the short term. ANZ grew strongly with 25 per cent NMV growth. This was driven by customers choosing to buy higher priced fashion items more frequently.

GFG has a strong funding position with Pro Forma cash of €455.4 million and Pro Forma net cash of €157.1 million (excluding the convertible bond and other third-party debt) at the end of the quarter. These cash balances include the value of the cash held in the CIS business but do not include the additional c.€100 million of proceeds to be received on completion.

Christoph Barchewitz and Patrick Schmidt, co-CEOs of GFG, said: “GFG has achieved NMV growth and a stable adjusted EBITDA margin despite a challenging market and trade environment for our industry. Given our presence in growth markets, we are experienced at adapting to macro issues and volatility. We have increased our focus on improving efficiency and managing our costs, while strengthening our platform proposition and assortment to continue inspiring our customers. With over 800 million consumers projected to spend around €230 billion on fashion and lifestyle products in GFG’s markets this year, we remain confident in the significant opportunity ahead.”

GFG’s outlook is impacted by the macroeconomic backdrop dampening consumer spend and elevated levels of uncertainty over the group’s peak trading period. In ANZ, consumer demand trended downwards through the quarter, and it expects this alongside elevated levels of promotional activity to continue into Q4. To reflect the change in demand environment, the group is actively managing its cost base and maintains its focus on finishing the year strongly and efficiently.

Fibre2Fashion News Desk (KD)