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?

Great. Thanks, Russell. I'll take a stab at that. It is not an easy question to answer, but I think fundamentally the way we look at it is we look at it from in driving, you know, profit from two angles. We look at order profitability and we look at customer profitability. On the order profitability side, we're constantly looking to drive efficiency into fulfillment, delivery proposition, all of those things, because obviously as we can kind of better economics to each individual order, that helps the overall picture. And then through the customer profitability lens, we look very much at the entire lifecycle of the customer. As you know, we're now, you know, 15 years into this business and in these markets. And so we have a huge amount of historical data around which types of customers, through which channels, in which locations, which devices, et cetera, and also with which initial browsing, search, purchase behavior end up being the ones that really become long-term And there's a lot of effort in terms of driving our new customer acquisition and also our reactivation towards those higher-value customers, such that we are not investing marketing spending on customers that have a high probability of turning out to be lower-value customers. To your percentage question, it's obviously a distribution. That's why things like the loyalty program we announced in Australia are so important to us to really make sure that the very high-value customers, so let's say the top 5% or 10% of customers who are accounting for a much larger percentage of a deal spent, are feeling particularly special and looked after from every aspect of the experience. And then at the other end of the distribution, you know, we do have customers that through also behaviors around returns and other things end up being very, very unprofitable. And that's an area where we are tightening some of our policies and behaviors as well. So I would say that it's a very multidimensional effort to try to drive this. Ultimately, where we think this will be most visible is through the purchase frequency of the average customer base and moving that upwards. And I think that's what we want to be measured against as the ultimate outcome from this entity.

Great, thanks. And secondly, on Southeast Asia, it's interesting that you saw a lower revenue decline than you did in active customers. So could you just talk about what's happened in Southeast Asia, please?

Sorry. Yeah, Ross, good morning.

Hi. I mean, what we're seeing really in South East Asia, again, sort of goes back a little bit to Christophe with regards, you know, the customers that we're retaining and attracting actually are increasing their overall sales. So we're seeing that build-up with actually the declining revenue as a result then ends up being lower than the declining customer.

Okay. And Helen, there was a broad improvement in profitability, EBITDA and EBIT year-on-year. So was that across all three divisions or did it effectively follow the trends in gross margin because the gross margin in Australia was a little weaker?

Yeah, the gross margin was a little weaker, but we've seen sort of consistent improvement in profitability across all of our regions. So, yeah, you know, we've got the improvement in gross margin at a total level, but also you'll see, you know, at a 3.5 percentage point improvement on adjusted EBITDA, there's been significant efficiency and further cost out, which we've seen across all regions, for all regions cutting forward.

And my final question is, I know it's not long since the last set of results, but I'd just be interested in how your thoughts have evolved over the last month or so to how you get the improvement in profitability this year, given the conflict is going on a bit longer. So do you think you're having to work a bit harder on OPEX this year than perhaps you previously thought?

I mean, we set the year out as you say, about six weeks since we last spoke. I mean, a lot has happened over that time, but we set the year with a broad top-line range, from minus four to plus four, and are confident that within those bookends, we have plans to be able to deliver the profitability improvements that we set out in the guidance. Obviously, the longer that the wider macro phase In tax class, et cetera, we need to be mindful overall around OPEX, CAPEX, because as you can imagine, you know, we're making very conscious decisions on a day-to-day basis with regard, you know, intake, with regard to CAPEX, with regard to headcount, et cetera. So as you stand at the moment, within the range that we feel comfortable with, we're committed to that improvement in profitability. Okay.

Okay. Thanks very much. Thank you very much for your questions, Russell. Our next question is coming from Anne in Critchville of Barenburg. Please go ahead, Anne. Your line is open. Thank you.

Thanks. Good morning, Helen and Christophe. I've got three questions, if I may. So the first one's on current trading, because last time you spoke to us, I think at the beginning of March, you did mention a weaker consumer in January and February compared to Q4 in Australia and Brazil. So I just wondered if that had actually weakened further since you last spoke to us due to any impacts on consumer sentiment given the Iran conflict. And then the second question's on average order value, that 5% growth year-on-year. Just wondered what the drivers were behind that, you know, whether it's like-to-like inflation or not. And then the third question's on the gross margin. So just wondered what the drivers were behind the gross margin increase in LATAM and Southeast Asia. So, you know, was it mixed or, you know, whatever was going on there? Thanks very much.

Morning, Anne. Hello. So let me take all of those in order. So current trading, I mean, Q1 has played out in line with our expectations and in line with the trade that we described when we did our four-year results at the start of March. And we're really seeing similar trends at a group level in April. So we're not seeing anything particularly worse at a group level than the Q1, so we're broadly in those similar trends. That remains in line with the way in which we've described guidance that overall we expect a softer half one overall for the year. Your second point was on average order value. I think with regards what driving that increase. We are seeing, you know, the 5% increase. We're seeing about half of it coming from wider inflation. And then the rest really around country mix. So as the average order value, which is higher in Australia, grows as well, proportionally that's driving the overall group average order up as well. So I've already located it in two buckets, overall inflation and then country mix. driven by Australia. And then lastly, Anne, your question on gross margin. I think specifically it was what was driving some of the increases in LATAM and then in Southeast Asia. So overall, retail margins remain sort of broadly stable across the board, little bit of movement within each region. Within LATAM, we've seen a a larger participation in marketplace. So that's really driven the overall increase within LATAM. And the main driver in Southeast Asia is platform services. So we've seen a higher participation in platform services revenue in the quarter, which has driven the increase there.

Great. Thank you.

Thank you very much, Ed. As we have no further audio questions at this time, we'd like to turn the call over to Sowery for any questions submitted through webcast. Thank you.

So, a question from Christian at New Ways. Are you seeing any first-contact loyalty program at INZ?

Yeah, thanks, Christian. I'm happy to take that. As you already know, we launched the Iconic Front Row in October last year, so we're still, you know, probably six months into it. So far, you know, customers are earning items and rewards, and the program is meeting our expectations around the level of engagement, the level of people using those items and rewards, and also the cost to us as a business. We are also seeing the improvement in purchase frequency and loyalty that we expected. I think overall, we're also very conscious that it does take time to really vet the thing and make sure that all of our customers understand it, including the high-frequency, you know, high-value customers understand it more quickly given the very frequent engagement they have with the platform. But then we also have a large number of customers that, a year and so for the of how we, you know, increase the value of the program to the customer. But overall, I'm very much on track and very pleased with the launch and the rollout of that program last year.

Just going back to the last question. I think Anne has another one.

Thank you. And you've had it open. Please go ahead.

Thanks. Thanks. So I've got two questions, sort of thematic ones. The first one on AI, because last time you said that about a low single-digit percentage of traffic was coming from AI. So I just wondered if that's building fast or not. And then the second one is on the idea of software as a service, because you've got proprietary tech. and you've got fulfilled by. So I'm just wondering if you've ever considered doing a Zalando or a Next, basically, and putting them together to offer other brands and retailers help with website tech, perhaps, or software generally, in addition to logistics.

Yeah, thanks, Anne. I'll take those two. So on AI and specifically the traffic, I think what you're referring to is the traffic volume we're getting from you know, the Geminis, Chachipikis, Klots, et cetera, of the world, that remains very, very small. But we do obviously see it growing, and it is growing at a good percentage, but not in a way that we think that there is a fast path to that becoming a very important traffic source. That's the current status. Obviously, there's a lot of things around, you know, commerce protocols and other things on the technology side evolving there, please keep in mind also that very often a lot of these, let's say, more headline-grabbing rollouts, they start in the U.S., they eventually come to Europe, and, you know, it takes a lot longer until they land in all of our markets. And so, you know, we can often see quite a lot of this kind of innovations that are driven by, let's say, the Western technology companies, you know, in the real world in markets like the U.S., U.K., or other European markets before they come to us. What we're very focused on is making sure that we are showing up as an important retail platform on all of the AI tools to when people, you know, look for fashion advice, look for products, et cetera. So that's on the IAI traffic side. On this last question, very good question, thank you. We are very focused on enabling our marketplace and platform services for brand partners. There's a lot of opportunities to grow this, in particular fulfilled by GFG and the marketing, and we're focusing most of the tech investments on those platforms. We are enabling brands to sell on other marketplaces in Southeast Asia throughout So in that case, we do provide technology that lets the brands, you know, sell on their brand.com, not the front end, but basically the back end of that in terms of the fulfillment, but also integrates them into our Valora platform as well as into other marketplaces if they want to sell on those. We have made a quite conscious decision not to go into the business of e-commerce stores of contents or those types of things because we don't think we have a particular competence to do that well for Brand.com and also please remember that most of the global brands make those technology choices in their largest markets and for most of the global brands obviously our markets are not the largest and so they are often more follower markets when it comes to technology choices and therefore we look at this opportunity in the

Thank you very much.

Thank you. We have no further audio questions at this time.

Okay. Thank you all for joining today. If you have any further questions, please reach out to the investor relations team directly.