Global Fashion Group S.a. · XETR:GFG
Global Fashion — Q4 2023 Earnings Presentation
37 slides from Global Fashion's earnings presentation, Mar 6, 2024
Slide 1: #1 Fashion & Lifestyle Destination in LATAM, SEA & ANZ
#1 FASHION & LIFESTYLE DESTINATION IN LATAM, SEA & ANZ Q4 & FY 2023 RESULTS PRESENTATION 6 March 2024
Slide 2: FY 2023 Summary
FY 2023 SUMMARY 1 NMV topline impacted by challenging market and weak consumer sentiment 2 Maintained stable Gross Margin through platform business models and trading optimisation 3 Significant cost initiatives mitigated volume decline to achieve Q4 Adjusted EBITDA breakeven 4 Improved Normalised Fr
Slide 3: Q4 2023: Cost actions offset topline declines to achieve breakeven Adj EBITDA
Q4 2023: COST ACTIONS OFFSET TOPLINE DECLINES TO ACHIEVE BREAKEVEN ADJ EBITDA €369m 43.6% 0.2% NMV GROSS PROFIT MARGIN ADJ. EBITDA MARGIN (14.0)% yoy1 +0.9ppt yoy +2.1ppt yoy 8.8m 5.9m 2.4 ACTIVE CUSTOMERS ORDERS ORDER FREQUENCY (18.6)% yoy (19.5)% yoy (5.5)% yoy (1) Constant currency growth rate. 3
Slide 4: FY 2023: Countered market headwinds with stable gross margin and cost efficiency
FY 2023: COUNTERED MARKET HEADWINDS WITH STABLE GROSS MARGIN AND COST EFFICIENCY €1,279m 42.1% (6.9)% NMV GROSS PROFIT MARGIN ADJ. EBITDA MARGIN (14.2)% yoy1 (0.2)ppt yoy (2.9)ppt yoy 8.8m 20.8m 2.4 ACTIVE CUSTOMERS ORDERS ORDER FREQUENCY (18.6)% yoy (23.1)% yoy (5.5)% yoy (1) Constant currency grow
Slide 5: Streamlined cost base and improved cash flow
STREAMLINED COST BASE AND IMPROVED CASH FLOW TOTAL COST BASE1 NORMALISED FREE CASH FLOW (€M) (€M) FY/22 FY/23 FY/22 FY/23 +€33m (513) (68) in Q4 (595) (113) (11)%2 (15)% in Q42 +€45m (1) Total cost base includes expenses related to fulfilment, marketing, technology (including capital expenditure), a
Slide 6: Segment Results & Business Updates
SEGMENT RESULTS & BUSINESS UPDATES 6 Q4 & FY 2023 RESULTS PRESENTATION
Slide 7: Continued delivery of key priorities
CONTINUED DELIVERY OF KEY PRIORITIES BEST-IN-CLASS PARTNER OF CHOICE FOR BRANDS PEOPLE & PLANET POSITIVE CUSTOMER EXPERIENCE • Broad and relevant assortment • Unlocking complex markets • Climate action • Inspiring and seamless digital experience • Offering flexible business models • Circularity and
Slide 8: Progressing as a platform business
PROGRESSING AS A PLATFORM BUSINESS MARKETPLACE FULFILLED BY GFG & CROSS-DOCKING PLATFORM SERVICES SHARE OF NMV SHARE OF MARKETPLACE SHIPPED ITEMS SHARE OF REVENUE +4.7ppt +2.8ppt ~50% +1.6ppt 5-10% ~45% 38% 36% 33% 33% 4% 3% ~12% in SEA FY/22 FY/23 Goal FY/22 FY/23 Goal FY/22 FY/23 Goal 8 Q4 & FY 20
Slide 9: LATAM: Improving proposition faces challenging macro and competitive environment
LATAM: IMPROVING PROPOSITION FACES CHALLENGING MACRO AND COMPETITIVE ENVIRONMENT FY/23 KEY METRICS Q4/23 KEY METRICS NMV (€M) (17.9)%1 Q4/22 Q4/23 22-23 495 408 NMV1 (€M) 140 125 (12.4)% ADJ. EBITDA MARGIN Revenue1 (€M) 91 78 (15.8)% (4.1)ppt Gross Margin 40.2% 40.6% +0.5ppt (6.9)% (11.0)% Active C
Slide 10: LATAM: Key highlights
LATAM: KEY HIGHLIGHTS Attractive & Efficient Assortment App-Centric Customer Engagement Streamlined Structure More curated platform New Android app rollout in Brazil Focused operational footprint • Reduced presence to three key countries, exited Argentina PLATFORM RATIONALISATION +5ppt • Sublet or r
Slide 11: SEA: Gross margin improvements driven by marketplace and platform services share
SEA: GROSS MARGIN IMPROVEMENTS DRIVEN BY INCREASED MARKETPLACE AND PLATFORM SERVICES SHARE FY/23 KEY METRICS Q4/23 KEY METRICS NMV (€M) (15.0)%1 Q4/22 Q4/23 22-23 412 336 NMV1 (€M) 119 93 (18.0)% ADJ. EBITDA MARGIN Revenue1 (€M) 78 59 (20.9)% (1.4)ppt Gross Margin 42.2% 43.3% +1.1ppt 0.7% Active Cu
Slide 12: SEA: Key highlights
SEA: KEY HIGHLIGHTS Increased Customer Loyalty Prioritised Marketplace Expanded Platform Services Drove scalability and choice Accelerated capabilities without inventory risk to balance sheet • Enabled 50 brands to fulfil orders via single stock solution offering Grew loyalty programme penetration S
Slide 13: ANZ: Less discounting in Q4 and more platform business expands gross margin
ANZ: LESS DISCOUNTING IN Q4 AND MORE PLATFORM BUSINESS EXPANDS GROSS MARGIN FY/23 KEY METRICS Q4/23 KEY METRICS NMV (€M) (10.8)%1 Q4/22 Q4/23 22-23 646 536 NMV1 (€M) 185 152 (12.6)% ADJ. EBITDA MARGIN Revenue1 (€M) 134 107 (15.2)% (3.2)ppt Gross Margin 44.9% 46.4% +1.5ppt 2.4% Active Customers (M)
Slide 14: ANZ: Key highlights
ANZ: KEY HIGHLIGHTS Refreshed Marketing Approach Coveted Brands Launched More Efficient Operations & Tech Focused on brand awareness Enhanced assortment with key Rolling out SEA’s proven operation Feb-2024 partnership expansion and warehouse management system in ANZ • Step-change in capabilities for
Slide 15: Adapting responsibly to ensure a People & Planet Positive approach
ADAPTING RESPONSIBLY TO ENSURE A PEOPLE & PLANET POSITIVE APPROACH 2023 PEOPLE & PLANET POSITIVE REPORT PUBLISHED REGIONAL HIGHLIGHTS • 2023 report live online Ranked #3 in Brazil’s Fashion Transparency Index LATAM For strong disclosure on approach toward human • Six key priorities guiding our right
Slide 16: Group Results
GROUP RESULTS 16 Q4 & FY 2023 RESULTS PRESENTATION
Slide 17: Prioritised marketing efficiency impacting customer acquisition
PRIORITISED MARKETING EFFICIENCY IN UNCERTAIN ENVIRONMENT, IMPACTING CUSTOMER ACQUISITION ACTIVE CUSTOMERS ORDER FREQUENCY (M) (X) (18.6)% (5.5)% 10.8 2.5 2.4 8.8 FY/22 FY/23 FY/22 FY/23 Note: Active Customers and Order Frequency are rolling 12-month KPIs. 17 Q4 & FY 2023 RESULTS PRESENTATION
Slide 18: Topline pressure partially offset by order value, inflation impact wanes
TOPLINE PRESSURE PARTIALLY OFFSET BY ORDER VALUE, INFLATION IMPACT WANES NMV1 Retail Marketplace ORDERS AVERAGE ORDER VALUE1 (€M) (M) (€) (14.0)% (19.5)% +6.9% 7.4 59.9 62.1 443 369 5.9 34% 38% Q4/22 Q4/23 Q4/22 Q4/23 Q4/22 Q4/23 (14.2)% (23.1)% +11.6% 1,554 27.0 1,279 20.8 61.5 33% 57.5 38% FY/22 F
Slide 19: Demonstrated efficiency gains with breakeven Q4
DEMONSTRATED EFFICIENCY GAINS WITH BREAKEVEN Q4 REVENUE1 GROSS PROFIT / MARGIN ADJUSTED EBITDA / MARGIN (€M) (€M) (€M) (16.8)% +0.9ppt +2.1ppt 0.5 303 129 243 106 (1.9)% 0.2% 42.7% 43.6% (5.7) Q4/22 Q4/23 Q4/22 Q4/23 Q4/22 Q4/23 (18.0)% (0.2)ppt (2.9)ppt 1,069 453 838 353 (4.0)% (6.9)% (42) 42.3% 42
Slide 20: Successfully reduced cost base aligned with NMV decline
SUCCESSFULLY REDUCED COST BASE ALIGNED WITH NMV DECLINE COSTS (€M) FY/22 FY/23 22-23 FULFILMENT 248 202 (46) Impacted by volume MARKETING 106 87 (19) TECH & ADMIN1 190 181 (9) TECH CAPEX & CASH LEASES2 51 43 (8) Half driven by TOTAL COST BASE 595 513 (82) cost actions COST BASE YOY3 5.6% (10.7)%
Slide 21: Early actions delivered strong cost reductions by year-end across the group
EARLY ACTIONS DELIVERED STRONG COST REDUCTIONS BY YEAR-END ACROSS THE GROUP Q4/23 COST BASE CHANGE YOY1 LATAM SEA ANZ (18)% • Decisive actions taken to (8)% • Continued investment into (14)% • Restructured significantly in > (15)% GROUP REDUCTION EXCEEDS Q4 NMV DECLINE streamline regionwide ramp up
Slide 22: Disciplined inventory management with a focus on aged inventory
DISCIPLINED INVENTORY MANAGEMENT WITH A FOCUS ON AGED INVENTORY INVENTORY, NET OF PROVISIONS1 AS OF END OF Q4 (32)% yoy2 €183m €166m €111m 2021 2022 2023 Aged Inventory (>180 days) as a % of Gross Inventory 17% 23% 19% (1) Inventory excludes CIS and Argentina balances. (2) Constant currency growth r
Slide 23: Strong cash position with cost actions & working capital driving improvements
STRONG CASH POSITION WITH COST ACTIONS & WORKING CAPITAL DRIVING YOY IMPROVEMENTS (€M) 20221 2023 PRO-FORMA CASH BALANCE Adj. EBITDA (42) (58) (€M) FUNDING Cash Lease Costs (20) (20) 561 OPERATIONS Working Capital 5 48 (68) (75) TOTAL (57) (30) 397 €33m (23) Tech Capex (31) (24) Q4 inflow CAPEX PP&E
Slide 24: Outlook
OUTLOOK 24 Q4 & FY 2023 RESULTS PRESENTATION
Slide 25: FY 2024 Guidance
FY 2024 GUIDANCE FINANCIAL PRIORITIES • NMV ADJ. EBITDA Continued platform transition and inventory efficiency focus (5)-(15)% yoy1 €(25)-(45)m • Cost reduction from 2023 actions and incremental savings planned Implies €1.1-1.2bn • Capex and leases no more than in 2023 • Working capital cash inflow,
Slide 26: Path to positive Adj. EBITDA and breakeven normalised free cash flow
PATH TO POSITIVE ADJ. EBITDA AND BREAKEVEN NORMALISED FREE CASH FLOW 1 PLATFORM TRANSITION 2 MARGIN IMPROVED 3 CAPITAL EFFICIENCY MARKETPLACE share of NMV ~45% GROSS PROFIT ~47% CAPEX ~3% % of Revenue % of Revenue FULFILLED BY GFG & CROSS-DOCKING share of Marketplace ~50% ONGOING COST EFFICIENCY NEU
Slide 27: Q&A
Q&A 27 Q4 & FY 2023 RESULTS PRESENTATION
Slide 28: Appendix
APPENDIX 28 Q4 & FY 2023 RESULTS PRESENTATION
Slide 29: Operating cost ratios
OPERATING COST RATIOS COSTS % OF NMV 2020 2021 2022 2023 20-23 FULFILMENT 14.8% 15.3% 15.9% 15.8% 1.0ppt MARKETING 6.9% 7.5% 6.8% 6.8% (0.1)ppt TECH & ADMIN1 11.7% 10.7% 12.3% 14.2% 2.5ppt NMV GROWTH YOY2 22.0% 20.3% (0.7)% (14.2)% 1.9% (1) Admin costs exclude share-based payments. (2) Constant cur
Slide 30: FX sensitivity
FX SENSITIVITY €M IMPACT ON: CURRENCY CHANGE NMV REVENUE ADJ. EBITDA Q4/23 vs. Q4/22 AUSTRALIA (AUD) (6.1)% (10.0) (7.1) (0.5) BRAZIL (BRL) 1.0% 0.8 0.5 0.0 OTHER (0.6)% (2.8) (2.3) 0.6 IMPACT ON Q4/23 AT Q4/22 FX RATES (2.9)% (12.0) (8.9) 0.1 FY/23 vs. FY/22 AUSTRALIA (AUD) (7.1)% (40.8) (28.9) (0.
Slide 31: Adjusted EBITDA reconciliation
ADJUSTED EBITDA RECONCILIATION (€M) FY/22 FY/23 Adjusted EBITDA (42.3) (58.3) Share-based payment expenses (7.7) (1.7) Impairment of goodwill (41.2) (54.7) One-off costs1 0.9 (6.3) EBITDA (90.3) (121.0) Depreciation and amortisation (53.2) (57.5) Loss before interest and tax (EBIT) (143.5) (178.5) N
Slide 32: Issued share capital
ISSUED SHARE CAPITAL SHARE INFORMATION EMPLOYEE SHARE OPTION PROGRAMME WEIGHTED AVERAGE EXERCISE PRICE OUTSTANDING CALL OPTIONS2 Common shares in dematerialised Type of Share form with a nominal value of €0.01 €0.01 170,132 €5.99 2,451,892 Stock Exchange Frankfurt Stock Exchange €9.46 1,236,508 €30.
Slide 33: Convertible bonds due 2028
CONVERTIBLE BONDS DUE 2028 PRICING TERMS: MARCH 2021 REPURCHASES: APRIL 2022 AUGUST 2023 Outstanding Issue Size €375.0m Outstanding Issue Size €279.9m €178.3m Status Senior Unsecured Amount Repurchased €95.1m €101.6m Maturity 7 Years as % of Outstanding Principal 25% 36% Bondholder Put 15 March 2026
Slide 34: Group tax loss carry forwards as at FY 2023
GROUP TAX LOSS CARRY FORWARDS AS AT FY 2023 €M DEC-23 TIME LIMIT TO CARRY FORWARD • Can be carried forward and offset against future taxable income subject to local tax rules and LATAM 323 Predominantly Brazil (indefinitely) limitations • Brazil is the only country with a specific restriction OPERAT
Slide 35: KPI definitions
KPI DEFINITIONS Active Customers is defined as the number of customers who have purchased at least one item after cancellations, ACTIVE CUSTOMERS rejections and returns in the last twelve months. Adjusted EBITDA is EBITDA adjusted for share-based payment expenses, impairment of goodwill and other no
Slide 36: Upcoming events
UPCOMING EVENTS DATE EVENT LOCATION 30 April 2024 Q1 2024 Results Virtual 21 May 2024 BofA Consumer Apparel & Ecommerce Virtual Field Trip Virtual 12 June 2024 Annual General Meeting Luxembourg 14 August 2024 Q2 2024 Results Virtual 36 Q4 & FY 2023 RESULTS PRESENTATION
Slide 37: Disclaimer
DISCLAIMER Certain statements included in this document are forward-looking statements. Forward-looking statements can typically be identified by the use of words such as “expects”, “may”, “will”, “could”, “should”, “intends”, “plans”, “predicts”, “envisages” or “anticipates” or other words of simil