Global Fashion Group, the parent company of popular online retail brands Zalora, The Iconic, Dafiti, and Lamoda, has achieved a significant milestone by reaching break-even in the fourth quarter of 2019. This marks the first time that the company has not incurred any losses in a quarter.
Although the headline suggests that Global Fashion Group broke even, it actually reported a slightly positive adjusted EBITDA of €0.7 million. The company’s net merchandise value (NMV) showed a 22.9% increase on a constant currency basis, amounting to €554 million, while quarterly revenue grew by 17.7% on the same basis, reaching €417.7 million.
Global Fashion Group operates in Asia, Latin America, and Eastern Europe (CIS). It experienced a remarkable growth in active customers, with a 17% increase to reach 13.1 million, and orders also rose by 20.3% to 10.3 million.
This strong performance in the final quarter of 2019 capped off a successful year for the company. NMV experienced a constant currency growth of 23%, reaching €1.778 billion, while revenue increased by 17.2% to €1.346 billion. The company managed to improve its full-year adjusted EBITDA margin by 1.5ppt to -2.8%, with three out of four regions achieving break-even results. Adjusted EBITDA itself showed a narrower loss of €37.1 million compared to €49.8 million in the previous year.
The Co-CEOs of Global Fashion Group, Christoph Barchewitz and Patrick Schmidt, expressed their satisfaction with these results, stating that the company achieved its fastest growth in active customers, orders, and NMV in three years. They reiterated their commitment to becoming the leading fashion and lifestyle destination in their markets, placing a strong emphasis on investing in the entire customer experience from discovery to delivery.
The positive end to the year was driven by a record-breaking seasonal events period, which included Black Friday and Cyber Week, as well as specific events in Southeast Asia. These events resulted in a 36% year-on-year growth in NMV, with over 70 million site visits and 2 million processed orders.
Throughout 2019, Global Fashion Group expanded its product offering by providing both local and global brands. Customers gained exclusive access to renowned brands like Ralph Lauren, Gap, Swatch, and Estée Lauder in various regions. Additionally, the company launched its first male modest wear collection and introduced a resale model with over 10,000 “pre-loved” items available on the Zalora platform.
As of the end of the year, Global Fashion Group reported available cash of €300.8 million and sets its sights on achieving NMV growth between 17% and 20% in 2020. The company aims to achieve more than €2 billion in NMV and approximately €1.5 billion in revenue at constant currency. However, they acknowledge that external factors such as the Australian bushfires and a warm winter in the CIS region may impact the lower end of their projections.
Global Fashion Group has set a target to attain profitability at an adjusted EBITDA level by no later than 2021. The recent outbreak of COVID-19 remains a potential challenge for the company’s progress towards this goal.