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May 13, 2019
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Global Fashion Group sales improve, loss shrinks

May 13, 2019

Zalora owner Global Fashion Group said on Monday that it delivered a strong first quarter with year-on-year (YoY) net merchandise value (NMV) rising an impressive 22% to €341 million on a constant currency basis, while active customers reached 11.5 million, up 14.5% YoY.


Its revenue wasn't up quite as much, but with a 15.1% increase, it continues to head in the right direction, although it’s frustrating that all the way through its sales statement, the company only gave constant currency figures rather than reported figures.

The still-lossmaking business also said that its adjusted EBITDA loss improved to -€26 million from -€32.2 million a year ago, and the adjusted EBITDA margin reached -9.8%, the latter being an improvement of 1.9 ppts YoY.

Co-CEOs Christoph Barchewitz and Patrick Schmidt hailed a “quarter of strong growth” and said the company continues to build on its online platform for fashion & lifestyle brands to access growth markets and now has over 10,000 brand partnerships. 

“We are seeing strong growth in active customers as structural adoption of mobile and e-commerce continues across our markets,” they added. “Our customers are also buying more, and more often, as we use technology and our unique distribution network to make buying fashion online a frictionless part of everyday life. We continue to invest in the overall customer experience and our operational infrastructure to underpin our continued growth and progress to profitability.”

That increase in active customer numbers provided a big boost, with NMV per active customer rising by 7.5% on a constant currency basis. Orders showed strong growth, rising by 26.8% to 6.9 million, with order frequency going up by more than 8% compared to the same period last year.

The company’s Marketplace business showed continued growth in Q1 with the Marketplace share of NMV up to 19%. And the division's growth also contributed to improved gross margins of 37.6% in Q1, up from 37% a year ago.

The company is continuing to invest in its future and made capex investments of €12 million in Q1, focused on its in-house tech capabilities and fulfilment infrastructure.

Despite being loss-making, it has plenty of cash to fund its operations and its closing cash position at the end of the quarter was €178 million, helped by the fact that it disposed of its remaining interest in its Middle Eastern business Namshi in Q1, with net proceeds of €114 million. 


Regionally, it saw strong operations in Apac in Q1, with active customers up 18.3% to 3.6 million and NMV per active customer rising 13.2%. Its NMV numbers (up 24% to €116 million) and revenue figure (up 19.2% to €92 million), also looked good. 

The company said that Zalora further cemented its position “as the go-to-destination for modest wear in Singapore, Malaysia and Indonesia, through the roll out of the Zaloraya 2019 campaign in March.”  

It also recently launched The Iconic Considered, an initiative enabling customers to filter-shop based on their personal sustainability values. 
In LatAm, active customers rose 14.7% to 5.2 million, although NMV per active customer was up only marginally. NMV itself rose 18.4% to €110 million and revenue was €80 million, although the gross margin fell slightly.

In its CIS region, active customers grew by 9.6% to 2.8 million, with NMV per active customer up 7.7%. Q1 NMV of €115 million represented growth of 23.5% and revenue rose 13% to €86 million. Its Q1 2019 gross profit margin increased by 3.3 ppts to 37.4%. 

Contributing to this was its continued focus and investment in its premium brand assortment, which saw the average selling price “increase significantly in line with strategy.”

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