Global Fashion Group Q3 losses continue but key metrics move upwards

By

Sandra Halliday

Published
Nov 13, 2019

Recently listed fashion e-tailer Global Fashion Group reported Q3 results on Wednesday and said it delivered its strongest growth in net merchandise value (NMV) of the year during the past three months.

The company, which runs fashion websites in 17 countries, including the Commonwealth of Independent States (CIS), Latin America and south-east Asia, said NMV rose 24.1% on a constant currency basis to €433.8 million. 

Q3 revenue was €325.1 million, higher than the €264.6 million of the prior year period with revenue growth of 18.7% on a constant currency basis as its Marketplace share continued to grow. Its operations in APAC progressed fastest on the revenue front with a 24.1% rise.

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But the firm remains loss-making. Overall in Q3, its adjusted EBITDA loss was €9.1 million, which was better than the loss of €15.6 million at the same time last year. The adjusted EBITDA margin was -2.8% delivering an improvement of 3.1 percentage points (pp) year-on-year. Gross margin for the quarter was 40.5%, improving 4.3pp on Q3 last year, but this was flattered by the soft performance it had seen in CIS in Q3 2018.

Its gross profit rose this time to reach €131.5 million, better than the €95.9 million of a year ago.

Being loss-making is only to be expected of an online retail business that's still at a relatively early stage of its development and most of its other metrics looked strong during the period.

The company operates multibrand fashion websites including The Iconic, Zalora, Dafiti and La Mode, and said active customers reached 12.4m, growing 15%, with NMV per active customer also continuing to increase, by 6.9% to €134.90. The number of orders in Q3 was also up, rising 20.8% to 8.5m. GFG said customers are purchasing 7.5% more often at 2.6 times per year with a 2.8% increase in their average order value.

Co-CEOs Christoph Barchewitz and Patrick Schmidt said in a prepared statement: “We had a strong third quarter with a good step up in NMV. We have focused on enhancing our market-leading customer experience through broadening our assortment, enhancing our app functionalities and further cementing sustainability as a key pillar of our business — all through our ongoing excellent localised execution. In this way, we continue to invest across our early stage markets, strengthening our growth and path to profitability even further.” 

GFG had continued to evolve its assortment strategy with the launch of 440+ fashion and lifestyle brands during the quarter and the introduction of new categories and more exclusive brand collaborations and products. It also launched its first sustainable own-brand, AERE, and appointed its first Chief Sustainability Officer. 

And it’s also been very tech-focused. It said that innovations in app functionality have continued to deliver new levels of customer engagement and strengthened GFG’s app-first approach. Its apps were downloaded over 9 million times and generated 50% of NMV in Q3, up 7pp year-on-year.