Coronavirus: Global Fashion Group sales grow during lockdown as it eyes profitability

The fashion etailer said that revenues grew 8.1% in the first quarter of the 2020 financial year, which reflected a “growing proportion of transactions coming through the marketplace”.

GFG said that adjusted EBITDA for the period was negative 8.3%, an improvement of 150bps year on year, “continuing our path to profitability”.

The retailer said the improved EBITDA performance was driven by a higher gross margin and offset by increased fulfilment costs.

In terms of demand, GFG reported that active customers increased 15.5% on its platform to 13.3 million during the period. Orders grew 7.5% to 7.4 million, with a 5.2% increase in average order value as well.

While solid, GFG said its first-quarter results had been “negatively impacted” by the coronavirus, but that it was still trading in line with “management expectations”.

GFG also said it intends to cancel its undrawn lending facility and replace it with “more cost-effective financing arrangements”.

As a retailer operating in multiple international markets, GFG said it had noted similar impact across the world from the coronavirus, albeit “at slightly different times and with different severity”.

Generally, GFG said that orders dipped in late March and early April, before recovering in the second week of April, and then “accelerated strongly” by the end of April into early May.

In terms of popular categories during lockdown, GFG said it saw an increased demand for sportswear, wellness and loungewear, while dresses and formalwear saw “significant declines”.

GFG said it would be slashing its marketing, technology and administrative budget by €40m, its inventory intake in the second quarter by €90m and its capex investment for the 2020 financial year to no more than €45m.

Co-chief executives Christoph Barchewitz and Patrick Schmidt said: “GFG has had a good start to the year, trading in line with our expectations until mid-March. We have continued to deliver against our strategic priorities, with strong growth across NMV, revenue, frequency, active customers and order, while improving profitability.

“Our priority has always been the safety and wellbeing of our people and customers, and we adapted our business quickly to the Covid-19 pandemic. As a result, we have been prepared for the strong growth we have seen in the last three weeks and continue to build on the accelerating demand for ecommerce consumption in our markets.”