Regionally, Latin America (LATAM) faced a tough quarter with an 18.1 per cent drop in NMV, driven by consumer spending weaknesses and intense competition. In response, GFG is refining its strategy and tightening cost controls. The South East Asia (SEA) region, despite a 15.0 per cent decline in NMV, saw a substantial increase in Gross Margin, up five percentage points to 44.6 per cent. Australia and New Zealand (ANZ) experienced a 16.4 per cent decrease in NMV, attributed to stronger YoY comparatives as the consumer spending slowdown commenced later than in other regions.
Global Fashion Group reported a Q1 FY24 NMV of €239 million (~$256.2 million), down 16.5 per cent YoY, with orders falling 18.1 per cent.
Despite regional challenges, gross margin rose to 44 per cent.
GFG reaffirmed its 2024 guidance, expecting an NMV decrease of 5-15 per cent.
Adjusted EBITDA is projected between minus €25 million and minus €45 million.
Overall, each region contributed to a gross margin expansion, culminating in a group-wide increase of three percentage points to 44.0 per cent. The adjusted EBITDA margin saw a modest rise of 0.8 percentage points to minus 11.3 per cent.
In terms of operational efficiency, GFG highlighted a reduction in its total cost base by €16 million or 13 per cent, on a constant currency basis. Additionally, while inventory investment rose in Q1 to prepare for the new season, overall inventory levels were reduced by €52 million or 29 per cent year-over-year, reflecting a disciplined management approach.
Looking ahead, GFG reaffirmed its full-year guidance for 2024, projecting an NMV decrease of 5-15 per cent on a constant currency basis, which would result in an NMV between €1.1 billion and €1.2 billion. The company also expects its adjusted EBITDA to range between minus €25 million and minus €45 million.
“We are progressing our strategy with our platform transition and cost efficiency programme delivering improvements in profitability in Q1. Both Gross Margin and Adj. EBITDA margins expanded despite topline pressure. I am pleased by how we are not only implementing our strategy but also actively adapting it with new initiatives, demonstrating our commitment to navigating this market with creativity and differentiation,” said Christoph Barchewitz, CEO of GFG.
Fibre2Fashion News Desk (DP)