The net merchandise value (NMV) for Australian fashion platform The Iconic has improved in the second quarter, bumping up from its double-digit dive in recent months.
NMV - which is the net value of the total revenue generated - was down 8.4 per cent year-on-year for The Iconic in the second quarter. This is ahead of its two sister fashion platforms, Dafiti in Latin America (LATAM) and Zalora in Southeast Asia (SEA) - respectively recording an 11.1 per cent and a 20.4 per cent NMV decline.
Overall, the three platforms under the parent company Global Fashion Group (GFG) reported a 12.3 per cent fall in NMV in the second quarter to €285 million (A$472.63 million), alongside a 12.8 per cent fall in overall revenue, with both values improving from the same quarter last year.
Despite the falls across the board, GFG confirmed an improvement in gross margin to 45 per cent, up from 41.5 per cent recorded in the same quarter last year, with adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) down 2.1 per cent - an improvement from an 8.1 per cent decline last year.
“Our Q2 results reflect our team’s strength in being able to navigate a challenging market environment and still deliver progress on our commitment to sustainable growth and profitability over the long-term,” GFG CEO Christoph Barchewitz said.
“We are particularly pleased to see continued improvements in our Gross Profit and Adj. EBITDA margins, which highlights the effectiveness of our strategic initiatives underway.”
Regarding the overall NMV fall, GFG cited a year-on-year reduction of 16.9 per cent in orders and a 16.7 per cent reduction in active customers.
Whilst these topline metrics continue to reflect a subdued demand environment, GFG added the rates of decline moderated compared to recent quarters. Positive trends in customer reactivation and churn rate are mitigating some of the downward pressure from lower traffic levels, it claimed.
Average order value (AOV) increased across the board by 5.5 per cent year-on-year, which partially offset the impact of reduced volumes on NMV.
As for the gross margin improvement, GFG claimed this increase was driven by a retail expansion from lower discounting levels compared to last year and, to a lesser extent, increased participation in marketplace and platform services offerings.
GFG also reported an ongoing focus on cost efficiency, which generated a cash flow benefit by delivering a €34 million or 11 per cent reduction in its total cost base. The group’s inventory levels have also reduced by 18 per cent, with a targeted reduction of inventory older than 180 days reducing aged stock levels by €13 million year-on-year to represent 21 per cent of gross inventory by the end of the first half of 2024.
GFG anticipates its full-year guidance for 2024 will include a 5-15 per cent fall in NMV to around €1.1-1.2 billion. The group noted that the months of June and July have been the strongest for 2024 so far in terms of NMV trends.
Adjusted EBITDA is expected to be down €25-45 million for the full year.