Global Fashion Group says it is making progress towards profit

today Aug 21, 2019
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Global Fashion Group (GFG), the online fashion retailer focused on emerging markets, said it is working hard to reduce its losses as it reported second-quarter sales rose a currency-adjusted 16.5%.

Global Fashion Group

Shares in GFG, which runs fashion websites in Russia, Latin America and south-east Asia and which listed on the Frankfurt stock exchange last month, rose 4%.

GFG said it was making progress towards break-even on its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA), after its loss ticked up to 3.2 million euro ($3.55 million) in the second quarter.

“We are well on track,” co-chief executive Christoph Barchewitz told journalists, noting that the company had already reached profitability in Latin America and Australia in 2018, but it would take more time in south-east Asia.

Revenue came in at 343 million euros, while net merchandise value - the value of products ordered on the GFG marketplace - rose 22.7% on a constant currency basis to 449 million euros.

GFG, set up by Sweden’s Kinnevik and Germany’s Rocket Internet, trimmed its forecast for 2019 capital expenditure to 80 million euros from a previous 90-95 million euros as it shifted some spending on a new warehouse in Brazil to 2020.

Barchewitz said he was not too concerned about a 2.2% fall in average order value to 50.5 euros, saying it was more important to focus on order frequency, which was up 8.8%.

“There is certainly a tradeoff between frequency and average order value,” he said, but added: “The economic model is working at these order values.”

Europe’s biggest online fashion site Zalando, on which GFG was modelled, has also seen a fall in average order value as customers shop more frequently from their smartphones, but buy less each time, denting its profitability.

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