The Iconic delivered 15.5% growth in net merchandise value (NMV) last year despite higher levels of discounting, according to parent company Global Fashion Group (GFG).
NMV is gross transactions value that occurred on an online platform minus costs and expenses.
In its 2022 annual report, GFG said it saw costs increase from rising inflation across its global markets, as well as a drop in consumer sentiment and demand in Australia and New Zealand, prompting the company to make inventory adjustments for The Iconic through discounting.
“The lower demand environment meant we operated with less visibility and worked closely with brand partners to react quickly to changing patterns in demand,” the report read. "Inventory was actively managed, albeit with higher levels of discounting in ANZ resulting in a lower closing inventory position than the prior year. We experienced operating cost deleverage across the fixed cost structure.”
As well as The Iconic, GFG operates Zalora in South East Asia (SEA) and Dafiti in Latin American (LATAM).
The Iconic remains GFG’s highest revenue-making enterprise, with a 15.7% growth year-on-year (YoY) in revenue of €474.7 million (AUD$759 million) in 2022. Dafiti and Zalora reported declines in YoY revenue of -9.6% and -9.2% respectively in 2022, amounting to €349.3 million for Dafiti and €279.6 million for Zalora.
Across the group for 2022, GFG generated adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of -€40.8 million, dropping double from 2021 (-€19 million), with an adjusted EBITDA margin of -3.7%.
The Iconic reported a gross profit of €211.8 million, with an adjusted EBITDA of €11.3 million. In comparison, Zalora reported an EBITDA of €2.1 million, while Dafiti’s EBITDA was -€20.2 million.
GFG added that gross margin declined marginally by 0.8 percentage points year-on-year, driven by promotional activity in The Iconic and a broader rise in inventory prices.
“Fulfilment, Tech and Admin costs increased year-on-year as a percentage of NMV as fulfilment centre costs and technology investment increased,” the report read.
“Marketing expenses decreased year-on-year as a percentage of NMV as marketing investment was optimised to the current trading environment.”
Overall, GFG delivered NMV of €452.3 million in Q4 2022, down -6.9% YoY, driven by order volumes which were down 18.2% and Active Customers down 16.5%. GFG said this decline was offset by the 13.8% increase in Average Order Value (AOV) which it said has four drivers: increased items per order, country mix, category mix and price inflation net of discounts.
Revenue was down 8.5% for the quarter.
GFG CEO Christoph Barchewitz said 2022 played out differently than expected.
“I’m proud of how the team continued to adapt to a rapidly changing environment across all of our markets,” Barchewitz said. “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.”