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Singapore’s GFG delivers gross margin performance at 42.8% in Q4

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Despite pricing activity from lower demand, GFG delivered a broadly stable gross margin performance at 42.8 per cent in the fourth quarter of fiscal 2022. Profit was impacted by cost deleverage and additional costs at the Australia-New Zealand fulfilment centre net of savings from lower marketing investments. Together this led to an Adjusted EBITDA margin of (1.3) per cent. GFG successfully reduced its inventory levels down €12 million from 2021, putting us in a stronger position going into 2023.

Reflecting the lower demand environment, GFG delivered NMV of €452.3 million in Q4, (6.9) per cent yoy, driven by order volumes, down 18.2 per cent and active customers down 16.5 per cent. This decline was offset by the 13.8 per cent increase in Average Order Value which has four drivers: increased items per order, country mix, category mix and price inflation net of discounts. Revenue was down 8.5 per cent for the quarter. 

GFG delivered a broadly stable gross margin performance of 42.8 per cent in Q4 of fiscal 2022, despite pricing activity from lower demand. However, profit was impacted by cost deleverage and additional costs at the Australia-New Zealand fulfilment centre net of savings from lower marketing investments, resulting in an Adj. EBITDA margin of (1.3) per cent.

GFG’s Marketplace share in Q4 grew to 34.8 per cent of NMV, up 2.1 per cent year-on-year. While Southeast Asia grew Marketplace materially, ANZ’s focus on high-margin own brands resulted in a slight decrease in share. In Latin America, Marketplace sellers were deliberately rationalised to improve the customer experience. Overall, the Marketplace continued to grow in absolute terms. The group increased focus on its Platform Services and generated higher revenue from its Marketing by GFG, Operations by GFG and Data by GFG offerings, the company said in a press release.

“2022 played out very differently to what we expected and I’m proud of how the team continued to adapt to a rapidly changing environment across all of our markets. We continued to focus on delivering our strategy, which helped us navigate a volatile market and ultimately deliver €1.6bn in NMV last year, while maintaining a strong gross margin. Looking ahead, we will prioritise profit and cash flow over the near term whilst continuing to selectively invest for the future, ensuring we are well-placed when growth returns,” Christoph Barchewitz, CEO of GFG, said.

The outlook reflects the demand environment and the near term de-prioritisation of growth in order to protect cash flow and improve profitability. In 2023, GFG expects to deliver NMV growth of (5)-0 per cent, c.€1.5-1.6 billion in NMV, and c.€1.0 billion of Revenue, all on a constant currency basis. Adjusted EBITDA margin is expected to be (3)-(1) per cent, improving profitability year-on-year, while actively managing costs. Capex investment will be c.€35 million. The group expects to achieve Adj. EBITDA breakeven in 2024.

Fibre2Fashion News Desk (RR)


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