Global Fashion Group S.a. · XETR:GFG
Global Fashion — Q4 2022 Earnings Presentation
31 slides from Global Fashion's earnings presentation, Mar 15, 2023
Slide 1: #1 Fashion & Lifestyle Destination in LATAM, SEA & ANZ
#1 FASHION & LIFESTYLE DESTINATION IN LATAM, SEA & ANZ Q4 2022 RESULTS PRESENTATION 15 March 2023
Slide 2: Rapidly adapted and changed plans through 2022
RAPIDLY ADAPTED AND CHANGED PLANS THROUGH 2022 VOLATILE MACRO ENVIRONMENT 2022 GFG ACTIONS TAKEN TO ADAPT RUSSIA-UKRAINE WAR SOLD CIS BUSINESS INFLATION REDUCED INVENTORY TO CONTROL MARGINS CONSUMER SENTIMENT DISCIPLINED TECH INVESTMENTS REDUCED MARKETING & HEADCOUNT ONLINE PENETRATION PLATEAU 2 Q4
Slide 3: 2023 focus on cost actions whilst markets remain uncertain
2023 FOCUS ON COST ACTIONS WHILST MARKETS REMAIN UNCERTAIN MARKETS ENTERING 2023 GFG INITIATIVES IN PLACE UNCERTAIN MACRO CAREFUL MANAGEMENT OF INVENTORY LEVELS INFLATION DRIVE MARKETPLACE & PLATFORM SERVICES CONSUMER SENTIMENT RESTRICT CAPITAL INVESTMENT AND OVERHEADS DISCIPLINED CUSTOMER ACQUISTIO
Slide 4: FY 2022: continued delivery of strategic objectives in a softer market
FY 2022: CONTINUED DELIVERY OF OUR STRATEGIC OBJECTIVES IN A SOFTER MARKET ENVIRONMENT 49% €1,615m 19-22 growth1 42.5% (3.7)% NMV GROSS PROFIT MARGIN ADJ. EBITDA MARGIN (0.7)% yoy1 (0.8)ppt yoy (1.9)ppt yoy 11.2m 27.9m 2.5 ACTIVE CUSTOMERS ORDERS ORDER FREQUENCY (16.5)% yoy (14.3)% yoy 2.5% yoy Note
Slide 5: Q4 2022: stable gross margin whilst lower demand deleverages cost
Q4 2022: STABLE GROSS MARGIN WHILST LOWER DEMAND DELEVERAGES COST 40% €452m 19-22 growth1 42.8% (1.3)% NMV GROSS PROFIT MARGIN ADJ. EBITDA MARGIN (6.9)% yoy1 (0.5)ppt yoy (3.9)ppt yoy 11.2m 7.6m 2.5 ACTIVE CUSTOMERS ORDERS ORDER FREQUENCY (16.5)% yoy (18.2)% yoy 2.5% yoy Note: KPI definitions are in
Slide 6: H2 Business Update
H2 BUSINESS UPDATE 6 Q4 2022 RESULTS PRESENTATION
Slide 7: Our strategy remains unchanged
OUR STRATEGY REMAINS UNCHANGED 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 consci
Slide 8: Positive indicators across all key initiatives in LATAM
BEST-IN-CLASS CUSTOMER EXPERIENCE PARTNER OF CHOICE FOR BRANDS PEOPLE & PLANET POSITIVE POSITIVE INDICATORS ACROSS ALL KEY INITATIVES IN LATAM ADVANCING LATAM INITIATIVES TO ENSURE A BEST-IN- IMPROVE ASSORTMENT STOCK MANAGEMENT WITH CLASS EXPERIENCE EXCLUSIVITY AND RELEVANT BRANDS SELECT INTERNATION
Slide 9: Marketplace supports gross margin and strengthens the balance sheet
BEST-IN-CLASS CUSTOMER EXPERIENCE PARTNER OF CHOICE FOR BRANDS PEOPLE & PLANET POSITIVE MARKETPLACE SUPPORTS GROSS MARGIN AND STRENGTHENS THE BALANCE SHEET BIGGEST BRANDS ADOPTING MARKETPLACE STRENGTHENING BRAND PARTNERSHIPS NMV (€M) ITEMS SHIPPED WITH FULFILLED BY GFG & CROSS DOCKING (M) 284.0 287.
Slide 10: Ensuring our future is People & Planet Positive
BEST-IN-CLASS CUSTOMER EXPERIENCE PARTNER OF CHOICE FOR BRANDS PEOPLE & PLANET POSITIVE ENSURING OUR FUTURE IS PEOPLE & PLANET POSITIVE People and Planet LOOKING AFTER OUR PEOPLE IMPROVED CARBON ACCOUNTING WITH NEW AI CARBON TOOL Positive Report 2022 Available 4-April More accurate monitoring for em
Slide 11: Group Metrics
GROUP METRICS 11 Q4 2022 RESULTS PRESENTATION
Slide 12: Customer numbers reflect lower marketing spend and COVID cohort run-through
CUSTOMER NUMBERS REFLECT LOWER MARKETING SPEND AND RUN-THROUGH OF LARGE COVID COHORT ACTIVE CUSTOMERS ORDER FREQUENCY (M) (X) (16.5)% 2.5% 13.4 2.5 2.4 11.2 FY/21 FY/22 FY/21 FY/22 Note: KPI definitions are included in the Appendix. 12 Q4 2022 RESULTS PRESENTATION
Slide 13: Drop in volume offset by increase in order value
THE DROP IN VOLUME OFFSET BY THE INCREASE IN ORDER VALUE INFLATION NMV COUNTRY & Retail Marketplace ORDERS AVERAGE ORDER VALUE CATEGORY (€M) (M) (€) MIX (6.9)%1 (18.2)% 13.8%1 59.5 9.3 473.6 452.3 7.6 50.9 33% 35% Q4/21 Q4/22 Q4/21 Q4/22 Q4/21 Q4/22 (0.7)%1 (14.3)% +15.9%1 1,528.6 1,614.8 32.6 57.8
Slide 14: Q4 stable gross margin, fixed cost de-leverage
Q4 STABLE GROSS MARGIN, FIXED COST DE-LEVERAGE REVENUE GROSS PROFIT / MARGIN ADJUSTED EBITDA / MARGIN (€M) (€M) (€M) (8.5)%1 (0.5)% 8.4 (3.9)ppt 327.6 141.7 132.0 308.3 2.6% 43.3% 42.8% (1.3)% (3.9) Q4/21 Q4/22 Q4/21 Q4/22 Q4/21 Q4/22 0.1%1 (0.8)% (1.9)ppt 1,035.9 1,102.1 448.3 468.9 (1.8)% (3.7)% 4
Slide 15: Improving long-term unit economics
IMPROVING LONG-TERM UNIT ECONOMICS COSTS% OF NMV1 2019 2020 2021 2022 19-22 FUTURE TREND Scale efficiencies in earlier years and FULFILMENT 16.4% 14.9% 15.3% 16.0% 0.4ppt increase in Marketplace participation with de-leverage in 2022 Marketing investment typically at c.7% MARKETING 7.7% 6.9% 7.5% 6
Slide 16: Improved normalised free cash flow and strong year-end cash
IMPROVED NORMALISED FREE CASH FLOW AND STRONG YEAR-END CASH (€M) 2021 2022 PRO-FORMA CASH BALANCE Adj. EBITDA (18) (41) (€M) FUNDING OPERATIONS Cash Lease Costs (17) (20) 643 with Retail inventory to scale Working Capital (57) 7 (111) 95 13 562 TOTAL (92) (54) (78) Tech Capex (22) (32) CAPEX to inve
Slide 17: Regional Metrics
REGIONAL METRICS 17 Q4 2022 RESULTS PRESENTATION
Slide 18: ANZ solid performance whilst LATAM remains challenging
ANZ SOLID PERFORMANCE WHILST LATAM REMAINS CHALLENGING Change on Q4/211 Q4/22 NMV (€M) Q4/22 ACTIVE CUSTOMERS2 (M) 184.7 6.2 149.1 118.5 2.9 2.1 (13.2)% (8.3)% 0.1% (20.5)% (20.9)% 7.9% LATAM SEA ANZ LATAM SEA ANZ Q4/22 REVENUE (€M) Q4/22 GROSS MARGIN (%) 134.1 40.6% 42.2% 44.9% 96.2 78.3 (13.1)% (1
Slide 19: Profitability impacted by gross margin investment and cost deleverage
PROFITABILITY IMPACTED BY GROSS MARGIN INVESTMENT AND COST DELEVERAGE Change on FY/21 1 FY/22 NMV FY/22 ADJUSTED EBITDA (€M) (€M) 646 556 €(8.1)m €2.1m €(4.3)m 11.3 412 2.1 (20.2) (12.3)% (4.8)% 15.5% LATAM SEA ANZ % of Revenue LATAM SEA ANZ (5.8)% 0.7% 2.4% (1) NMV changes are at constant currency
Slide 20: Outlook
OUTLOOK 20 Q4 2022 RESULTS PRESENTATION
Slide 21: FY2023 priorities and context
FY2023 PRIORITIES AND CONTEXT • Focus on profitability and cash flow, rather than growth in 2023 • Careful management of inventory and reduce inventory intake significantly (>€60m) to protect CONTINUE ADAPTING margin and cash flow TO THE NEAR-TERM • Drive a strong Marketplace business that’s able to
Slide 22: FY2023 guidance: improving profitability with low growth
FY2023 GUIDANCE: IMPROVING PROFITABILITY WITH LOW GROWTH NMV REVENUE ADJ. EBITDA CAPEX (5)-0% c.€1.0bn (3)-(1)% c.€35m c.€1.5-1.6bn LONGER TERM ADJ. EBITDA BREAKEVEN 2024 AMBITIONS: NORMALISED FREE CASH FLOW POSITIVE AT NMV OF €2.2 to 2.5bn Note: At 31 December 2022 closing exchange rates. 22 Q4 202
Slide 23: Q&A
Q&A 23 Q4 2022 RESULTS PRESENTATION
Slide 24: Appendix
APPENDIX 24 Q4 2022 RESULTS PRESENTATION
Slide 25: FX sensitivity
FX SENSITIVITY €M IMPACT ON: CURRENCY ∆ Q4/22 vs. Q4/21 NMV REVENUE ADJ. EBITDA ARS (72.0)% (24.7) (13.4) 0.5 AUD 1.1% 1.9 1.4 0.0 BRL 18.4% 15.2 10.4 (0.8) OTHER (1.0)% 1.8 0.8 0.1 IMPACT ON Q4/22 AT Q4/21 FX RATES 3.4% (5.8) (0.8) (0.2) 25 Q4 2022 RESULTS PRESENTATION
Slide 26: Adjusted EBITDA reconciliation
ADJUSTED EBITDA RECONCILIATION (€M) FY/21 FY/22 Adjusted EBITDA (19.0) (40.8) Share-based payment expenses (20.0) (8.0) IAS 29 Hyperinflation EBITDA impact - (4.6) Impairment of goodwill (22.1) (41.2) One-off costs1 (3.3) 1.0 EBITDA (64.4) (93.6) Depreciation and amortisation (44.9) (54.4) Loss befo
Slide 27: 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 €0.01 183,468 €6.00 2,648,218 Stock Exchange Frankfurt Stock Exchange €10.32 3,190,934 €30
Slide 28: Convertible bond 2021
CONVERTIBLE BOND 2021 PRICING TERMS Outstanding Issue Size in the Public Market €279.9 million CONVERTIBLE BOND REPURCHASE 2022 Status Senior Unsecured Maturity 7 Years • On 27 April 2022, the Group repurchased Issuer Call After Year 4 at 130% Trigger outstanding Convertible Bonds due 2028 via a mod
Slide 29: KPI definitions
KPI DEFINITIONS Active Customers is defined as the number of customers who have purchased at least one item after ACTIVE CUSTOMERS cancellations, rejections and returns in the last twelve months Adjusted EBITDA is EBITDA adjusted for share-based payment (income) / expenses, impairment of goodwill, G
Slide 30: Financial calendar – upcoming events
FINANCIAL CALENDAR – UPCOMING EVENTS DATE EVENT LOCATION 29 March 2023 Jefferies Pan-European Mid-Cap Conference London 27 April 2023 Q1 2023 Results Virtual 25 May 2023 BofA Ecommerce Consumer Virtual Fieldtrip Virtual 13 June 2023 Barclays European Internet & Emerging Tech Conference London 19 Sep
Slide 31: 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