The Iconic’s Net Merchandise Value (NMV) dipped slightly by -0.2% in the first quarter of 2023, with parent company Global Fashion Group (GFG) reporting a tough consumer climate.
The Group said the Australia and New Zealand (ANZ) region is seeing more cautious consumer sentiment, matched with higher levels of promotion.
As well as The Iconic in ANZ, GFG operates Zalora in South East Asia (SEA) and Dafiti in Latin America (LATAM).
GFG said its overall NMV fell by -6.7% year-on-year (YoY) to €303.3 million in Q1, impacted by order volumes, down -19.1%, and Active Customers down -17.7%.
This was partly offset by the 15.4% increase in Average Order Value driven by inflation, country mix and category mix. Revenue was down -10.1% YoY.
In LATAM, NMV declined -13.7%, while SEA saw a drop of -6.9%. Both regions were affected by marketing investments, alongside reductions in Active Customers.
GFG delivered Gross Margin of 41.1%, a 1.7ppt decline YoY driven by price activity. Profitability was impacted by fixed cost de-leverage which led to an Adj. EBITDA margin of -12.1%.
While macroeconomic uncertainty continues, GFG said it is managing inventory carefully and has reduced inventory levels by €31 million compared to last year.
The Group said it expects to deliver NMV growth between -5% and 0%, c.€1.5-1.6 billion in NMV and c.€1.0 billion of Revenue by the end of year, all on a constant currency basis. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) margin is expected to be between -3% and -1%.
The Group expects to achieve Adj. EBITDA breakeven in 2024.
GFG said the outlook reflects the demand environment and near term de-prioritisation of growth to protect cash flow and improve profitability. It said these actions provide the opportunity to make year over year gains in Gross Margin and Adj. EBITDA across the second half of the year.
“Our focus remains the same as we set out at our recent Capital Markets Day,” GFG CEO Christoph Barchewitz said. “With ongoing market uncertainty, we are concentrating on what we can control - carefully managing our costs, our inventory and growing our Marketplace, which carries no balance sheet risk.
“This will allow us to stay on the path to profitability, whilst we wait for the right moment to return to investing in growth.”