Global Fashion Group plans IPO as it moves towards break-even
E-tailer Global fashion Group is planning a share listing with the IPO set to see its shares trading on the Fankfurt Stock Exchange as soon as next month. The group will be issuing new shares for the purposes of the IPO and only these shares will be publicly traded, with the company using the proceeds to invest in driving further growth and for “general corporate purposes”.
So how much does it actually expect to raise through this listing? The plan is to generate €300 million and to invest the net proceeds in “the technology platform, customer acquisition, and fulfilment and delivery infrastructure, including automation”.
The company’s management highlighted the enormous growth potential in the e-commerce arena in its key regions (Asia-Pacific, Latin America and the CIS) with online retail penetration of fashion and lifestyle being only 6% in these areas, compared to 15% in Western Europe, 20% in the US and 39% in China.
Co-CEOs Christoph Barchewitz and Patrick Schmidt said: “We are excited about this next step for GFG. It is still very early days for fashion and lifestyle e-commerce in our markets. Today, most of our markets have less e-commerce adoption than Europe had 10 years ago.”
They added that all of the group’s markets are “seeing long-term structural growth in fashion and lifestyle e-commerce as they replicate the consumer trends of more advanced markets.
“As consumer behaviour migrates towards e-commerce, GFG’s well-known consumer platforms, local teams, and fashion-specific operational infrastructure put us at the forefront of this growth opportunity. An IPO will allow us to keep investing in our end-to-end customer proposition, further strengthening our position as the leading fashion and lifestyle destination in growth markets.”
The business operates four retail brands (The Iconic, Zalora, Drafiti and Lamoda) and, as mentioned, targets three regions, including Asia-Pacific, Latin America and the countries that made up the former USSR, now known as the Commonwealth of Independent States (CIS), with the very large markets of Russia and Ukraine included in this.
While still loss-making, like a number of e-commerce businesses at a relatively early-stage, the company’s annual losses have been shrinking and its most recent earnings also included fast-growing sales. The company “significantly reduced” its EBITDA losses to €49.8 million in the year to December 31 and revenue rose almost 19% to €1.15 billion.
The company offers more than 10,000 global, local and in-house fashion brands to a market of more than a billion consumers. And it said it has successfully developed strategic partnerships with 78% of the top 50 non-luxury global brands.
It's active customer base increased from 8.9 million people to 11.2 million between 2016 and 2018 and its revenues rose from €887 million to its latest figure over that period. After a strong Q1 this year, it said it expects to generate more than €1.3 billion in annual revenue for 2019 and to “make stronger progress towards” breaking even on an EBITDA basis.
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