Global Fashion Group (GFG) has recorded lower-than-anticipated sales across its three international markets in the second quarter of 2023.
GFG operates Dafiti in Latin America, Zalora in Southeast Asia and The Iconic across Australia and New Zealand.
GFG has reported that net merchandise value (NMV) declined in all regions during the period - approximately 19% in Latin America, 17% in South East Asia and 9% in Australia and New Zealand.
Based on preliminary results, GFG expects Q2 2023 approximate figures of negative 15% NMV growth and negative 19% revenue growth, both on a constant currency basis.
Alongside these, it is predicting a negative drop in adjusted earnings before interest, tax, depreciation and amortisation (A’EBITDA) margin of 7% and €467 million pro-forma cash.
The company’s previous outlook for the full year 2023 expected a continuation of the lower demand trends seen in Q4 2022 into H1 2023, and the potential for a recovery from this in H2 2023.
However due to the weaker sales and volumes, GFG reported the opportunity to perform more strongly in the second half of 2023 no longer appears probable.
“As a result, GFG now expects its financial performance for full-year 2023 to be impacted by greater discounting in our markets, clearing of higher-than-planned levels of aged inventory and ongoing fixed cost deleverage from lower volumes despite cost actions,” the company noted in a profit update.
GFG now expects full-year 2023 to see a negative NMV growth of 15% to 10% on a constant currency basis, with around €1.3-1.4 billion in NMV, circa €0.9 billion of revenue, a negative adjusted EBITDA margin of 8% to 6% and Capex investment of c.€30 million.
All figures reported herein are preliminary and unaudited. GFG will publish its second-quarter results as scheduled on August 10, 2023.