Global Fashion Group

Good morning, everyone, and welcome to the Oval Passion Group's Q1 2026 results presentation. I'm Helen Hickman, CFO of GFG. Today, I'll provide an overview of our first quarter's performance. Our CEO, Christophe Bartruis, will then join us for the Q&A session. In quarter one, we delivered another strong step forward in our profitability journey. Our adjusted EBITDA margin increased by 3.5 percentage points year-over-year, given by a combination of gross margin expansion and cost discipline, proving that our focus on healthy order and customer economics is delivering tangible bottom-line impact. On a regional basis, A&Z remained resilient, with growth across all top-line metrics, which helped mitigate the group's overall small MMV decline. Our focus on customer quality is delivering clear results with order frequency over the last 12 months rising to 2.4 times, up 1.9% year over year. This marks our third consecutive quarter of growth and a turnaround from the past two years. By prioritising frequent shoppers who drive long-term value, we're building a higher quality active customer base currently at 7.2 million customers. Our more loyal customer provides a resilient foundation to navigate current pressures on new customer acquisition and volume. Our average order value grew by 5.2% to €61. This growth was mainly driven by inflation and a favourable regional mix, with increased contribution from ANZ's higher average order value. This increase helped mitigate the impact of lower volumes on our NMV, which declined by 3% on a constant currency basis to €250 million. Moving on to revenue and margins. We generated €138 million in revenue, representing a 4.3% year-over-year decline. The gap between revenue and our 3% NMV decline was driven by the continued shift in our business model mix, as marketplace share increased to 42% for M&B. Growth margin improved by half a percentage point year-over-year to 46.5%, with higher margin contributions from platform services balancing our retail performance. This demonstrated our ability to maintain margin gains, even as business model makes an inventory benefit from 24 and 25 formulae. On adjusted EBITDA, we delivered a strong €5.4 million increase year over year as we realised savings for our 2025 and early 2026 cost initiatives and continued fulfilment sufficiencies across the group. Now let's turn to our regional performance. A&Z proved resilient this quarter through a softer consumer spending environment. AMZ achieved a 3.5% increase in NMV and a 4.0% revenue growth on a constant currency basis. This was supported by a 3.7% rise in active customers, driven by successful new customer acquisition and reactivation initiatives. AMZ's growth margin compressed slightly by 0.4 percentage points due to investment in our new loyalty program. In West Ham and SEA, we prioritise margin health as we face lower demand. In Natan, a greater contribution for marketplace for over 1.4 percentage points gross margin expansion. In SEA, platform service for over 1 percentage point increase. Now let's move on to our cash flow for the quarter. Q1 normalised free cash flow improved by 10 million euros year over year to negative 51 million euros. Whilst Q1 is a seasonally high outflow period, our trajectory towards break-even is strong. On a last 12-month basis, normalised free cash flow has improved by €24 million year-over-year to €-22 million. The year-over-year progress in Q1 was primarily driven by the €5 million improvement in adjusted EBITDA, supported by further discipline in working capital and capital. Looking at our liquidity position, we had a €19 million net reduction in borrowings this quarter, which was driven by the €32 million redemption of our convertible bond completed in March. This redemption was partly offset by a €13 million drawdown from our working capital facilities, which primarily consists of our new Australian RCF with NAD. Following the redemption, we now have €9 million of that convertible bond outstanding. we closed 4-1 in a strong position with €109 million in pro forma cash and €86 million in pro forma net cash. Now looking to the rest of the year. Our Q1 results were in line with expectations. The softer top line described in our Q4 results was successfully offset by improving margin trends. Therefore, we are reconfirming our full year 2026 guidance as set out in March. We expect NMV growth to range from negative 4% to positive 4% year-over-year on a constant currency basis. This implies an NMV range of €990 million to €1.07 billion. On adjusted EBITDA, we expect to deliver €15 to €25 million. Whilst our guidance is based on December 2025 closing rates, we've observed currency tailwinds with the Australian dollar and the Brazilian Rai strengthening against the euro as of the end of Q1. If this persists throughout the year, we may see a benefit to our euro ranges. Our guidance range continues to reflect softer first-half expectations whilst factoring in different trajectories for the second half. GFG has no direct exposure to the Middle East and is closely monitoring the secondary impacts on global supply chains and consumer sentiment. Our guidance reflects factors specific to our market, such as interest rates increases in Australia and upcoming election cycles in Latin. Our guidance does not assume prolonged geopolitical volatility, as this cannot be reliably predicted. We remain highly confident in our overall strategic direction. By prioritizing customer quality and maintaining rigorous discipline, we've built a solid foundation that allows us to navigate external variables whilst continuing to drive forward our profitable growth goals. We'll now open the call to your questions. If you'd like to submit a written question, please click on the speech bubble at the bottom of the screen. Thank you.

Thank you very much. Ladies and gentlemen, if you'd like to ask an audio question, please press star 1 on your telephone keypad to make sure your line is not muted while you still reach your appointment. Our very first question this morning is from Russell Poynton of Edison. Please go ahead. Your line is open.

Thank you. Morning, Christoph. Morning, Helen. A couple of questions. First of all, there's a very clear message that you're focusing on quality customers, which is showing up in a slight increase in the rate of decline quarter on quarter. So I suspect this is quite a difficult question to answer, but can you say anything that helps understand what percentage of our customers are kind of where you want them to be and what percentage are probably not where you want them to be from a quality perspective? And I suspect within that there's quite a lot of drivers in terms of product, you know, marketing, promotions, that type of thing. So where is the focus?