Global Fashion Group

Good morning everyone and welcome to Global Fashion Group's Q2 and H1 2026 results presentation. I'm Christoph Barchewitz, CEO of GFG and I'm joined today by our CFO, Helen Hickman. I will start with highlights for today and then share an update on progress we are making across the business. Helen will then take you through the regional and group financial results and our guidance for the full year. After that, we will open the call for questions. Overall, we are executing on our strategy and delivering financial results in line with our expectations and guidance. We've continued to improve our unit economics with sales and profit per customer and per order growing strongly, creating the foundation for profitable growth. We've made significant progress in enhancing our delivery proposition, strengthening our marketplace, and scaling our platform services offering. While today's focus will be on fulfilled buy, our platform services also continue to grow, driven by retail media across all three regions in our single stock solution in Southeast Asia. Combined with the integration of AI across our business, initiatives across these areas continue to strengthen our customer value proposition and profitable growth strategy. I'll be sharing more detail on these topics in a moment. On financial results, we delivered our first profitable H1 with our current footprint. For the LTN period to June, adjusted EBITDA improved by a strong 23 million euros year over year and normalized pre-cash flow by 28 million euros. Lastly, we have narrowed our 2026 guidance to take account of H1 results and our current expectations for H2. For NMV, we now expect a year-over-year change of negative 4 to 0%. For adjusted EBITDA, we now expect a range of 18 to 25 million euros. Helen will explain these changes in more detail. Turning to our Q2 financial highlights. NMV was broadly stable with a 0.6% constant currency decline while adjusted EBITDA margin increased by 1.8 percentage points. Our focus on unit economics is delivering results. Increased order frequency and cost discipline are offsetting the impact of fewer active customers and orders. Next, we have our business update. Over the last several years, we have focused on increasing the value and contribution generated from each customer and order, while also reducing our fixed cost structure to drive substantial profitability and cash flow improvements. While this transition has resulted in about a quarter reduction in active customers and orders, it has also fundamentally strengthened our unit economics. This progress is visible across the entire group as shown. with consistent trends on profit contribution in all three regions. NMV and gross profit per unit have increased, reflecting our more targeted approach to customer acquisition and deepened repeat engagement. These improvements become materially more pronounced further down the P&L. After fulfillment costs, profit contribution per active customer has increased by 47% over the last three-year period. while profit contribution per order has increased by 53%. After both fulfillment and marketing costs, the improvement is even more significant with profit contribution increasing by 91% per active customer and 99% per order. These results were enabled through a broad range of initiatives, including greater automation, improved terms with our delivery partners, and marketing allocation toward the channels and customers that generated the strongest returns. We will continue to optimize unit economics while reinvesting efficiency gains into customer experience and marketing. Turning to our delivery proposition, which is a critical driver of both customer experience and unit economics. We continue to deliver a high quality service with on-time delivery exceeding 90% across all regions and delivery speeds improving by more than 20% in ANZ and SEA compared with 2023 while remaining stable in LATAM. We are also elevating the customer experience through greater choice and transparency. Real-time tracking provides end-to-end order visibility while our expanded Fulfilled by GFG and Dropship partnerships are strengthening the marketplace delivery experience. We continue to invest in more delivery options. We have rolled out next day delivery in additional key metro areas, introduced flexible express tiers and increased the number of automated parcel lockers. Importantly, we delivered these service improvements while continuing to build a more efficient model. having reduced fulfillment costs by three percentage points of NMV over the last three years. This has been achieved through vendor negotiations, route optimization, and an expanded asset-like partner network that allows us to scale capacity without increasing fixed costs. All of these initiatives create a superior delivery experience that drives conversion and growth. Our Fulfilled Buy service leverages our delivery and fulfillment infrastructure to manage logistics for marketplace brand partners, enabling them to bypass internal operations while providing a more consistent shopping experience for our customers. Fulfilled Buy is live in all three regions, though they are at different stages of maturity. AMZ launched in early 2023 and adoption has been accelerating so that it now represents 15% of Marketplace NMV with 88 brands left. In Latam, the offering has continued to gain traction since its launch in June 24. Fulfilled Buy now accounts for 6% of Marketplace NMV across 70 brand partners. SEA is our most established market, having launched the offering in 2019. Fulfilled By contributes 29% of marketplace NMV. With 81 brand partners live, our focus has been on optimizing the assortment and brand mix to support stronger unit economics. Overall, Fulfilled By is a key contributor to the group's growing marketplace business. Together, Fulfilled By and platform services deepen our relationships with brand partners, improve their ability to reach and serve customers, Now looking at our integration of AI into our workflows across the business. In LATAM, we have transitioned to an AI-enabled workflow for image and video generation across our product catalog and marketing campaigns. The impact in Brazil has been significant, where e-production costs have reduced by over 50%. Beyond cost savings, this greater agility allows us to bring products to market faster and refresh content more frequently at scale. As AI opportunities extend beyond how we create content, we're also focused on how we improve how customers discover our products. In ANZ, the Iconic is the only Australian fashion retailer participating in Google's Universal Commerce Protocol, or UCP pilot. The UCP enables customers to discover select Iconic products through Google's AI services, including Google Search and Gemini, and move through to an integrated checkout journey. The Iconic remains a merchant of record and manages the entire fulfillment and post-purchase customer experience. This pilot allows us to learn from and help shape this emerging channel as shopping journeys evolve. As discovery shifts toward AI-driven search, we are also prioritizing answer engine optimization, or AEO, to ensure our platforms and assortment remain discoverable in these new environments. We are also applying AI to the commercial decisions we make every day. In ANZ, our automated pricing tool now covers 100% of our retail assortment. This enables faster, data-led pricing that helps our team better balance competition, margin, and sell-through. Beyond pricing, we are applying AI across broader commercial workflows, including product descriptions, campaign SKU selection, and buying optimization, all to improve the speed and quality of our decisions. In summary, we are successfully driving a more efficient and profitable business from each of these strategic initiatives. I'll now hand it over to Helen who will take you through our financial results.

Thanks Christoph. First, let's look at our regional segment results. Starting with ANZ, our largest region, generating about half of our NMV. ANZ delivered 3% year-on-year NMV growth in both half 1 and Q2 on a constant currency basis. This was supported by 2% active customer growth and strong engagement across targeted campaigns. In a more challenging discretionary spending environment, ANZ's performance reflects our highly relevant brand and assortment proposition that continue to resonate with customers. Higher living costs and interest rate increases have weighed on consumer confidence so far this year. Gross margin remained broadly stable at 48%. We saw growth driven by a greater mix of higher margin categories, including own brand of women's apparel, alongside increased marketplace participation, offset by our continued investment in the loyalty programme launched last year. As a result of further cost efficiencies, mainly in fulfilment, ANZ's half one adjusted EBITDA margin increased by two percentage points to a strong 5%. Moving on to LATAM, our performance in half one reflects clear resilience on profitability while facing external headwinds. LATAM delivered a solid three percentage points step up in adjusted EBITDA margin and was profitable in half one. despite NMV being down 2% and revenue down 7%. In the second quarter, NMV was down 1% and revenue down 5% reflecting external headwinds including record household debt and the World Cup which redirected consumer attention and spending. It was also a highly competitive environment driven by a tax change favouring cross-border players. Now turning to SEA. Similar to LATAM, SEA delivered profitability improvements despite facing top-line declines. In half-won, adjusted EBITDA margin reached 3%, improving 3 percentage points year-on-year. LNV declined 11% on a constant currency basis. SEA has made strong steps in reducing the fixed cost base to ensure we are well positioned as growth returns. Across four regions, we've demonstrated this half that we can deliver profitability in competitive markets through business model shifts towards more marketplace and platform services and operating cost improvements. Now, turning to the group results. Order frequency increased by 1.8% year on year to 2.4 times. We're seeing the customers who shop with us becoming more engaged, whilst active customers declined 5.5% year on year. We're continuing to rebalance our customer base towards profitable growth. Turning to NMV, Q2 moderated to a 0.6% decline on a constant currency basis, following a 3% decline in quarter one. For half one, NMV declined by 1.7% year on year. 5.3% higher average order values substantially mitigated the effect of 6.6% less orders resulting from lower traffic in the first half. Average order value was supported by three main drivers. In order of impact, this included a more favourable regional mix, price inflation and less discounting. Turn to Revenue and Profitability Path 1 revenue declined by 3.5% year-on-year on a constant currency basis, reflecting the lower NMV and increased marketplace mix. We improved gross margin by 0.2 percentage points year-on-year to 47.2%. Increased marketplace and platform service share offset a decline in retail margin. We improved adjusted EBITDA margin by €9 million year-on-year to positive 1 million, delivering our first positive adjusted EBITDA result for our first half within our current footprint. This represents a 2.8 percentage point margin improvement year over year. We delivered this through the benefits of evolving revenue mix and structural improvements to our cost base. We also continue to benefit from FX tailwinds this quarter. Now let me take you through our cost actions in more detail. Our total cost base continued to reduce significantly, significantly more than our NMV declined for half one. Fulfillment costs reduced by 1.3 percentage points as a share of NMV, reflecting continued automation and efficiency improvements across our logistics network, specifically reducing delivery and personnel costs. Technology and administrative costs also reduced by 1.3 percentage points, benefiting from headcount reductions and further simplification of the business. Marketing remained broadly stable at 6.9% of L&V, allowing us to maintain investment in the customer and growth initiatives that generate the strongest returns. We expect to deliver further efficiencies as volume returns. Turning to cash flow. In Q2, our €3 million improvement in adjusted EBITDA drove a corresponding improvement in normalised free cash flow, as other key components, including leases, working capital and capex, remain stable year-on-year. On a last 12-month basis, we're making strong progress towards a break-even position, with normalised free cash flow improving by €28 million year-on-year to €19 million. Our cash position remains robust. We closed Q2 with €105 million in pro forma cash and €89 million in pro forma net cash after accounting for third-party borrowings. Turning now to our full year 2026 guidance. On NMV, we have lowered the top end of our range to reflect half-won performance and our revised expectations for a more challenging second half. This range continues to consider factors specific to our markets, including the upcoming general election in Brazil and sustained cost of living pressures in ANZ. We now expect year-on-year constant currency NMV of negative four to zero percent. On a reported basis, incorporating half-won actuals and using 30th of June 26 closing exchange rates for the remainder of the year This translates to 1.05 to 1.09 billion euro. Whilst our original guidance provided in March used December 25 exchange rates, ongoing strength in the Australian dollar and the Brazilian rai offers a potential currency tailwind to our reported euro values, if sustained herein. On adjusted EBITDA, we've raised the bottom end of our range, and it now stands at 18 to 25 million euro, representing a year-on-year improvement of 9 to 16 million euros. This revised range reflects our half-won performance and the importance of Q4 trading. Our full-year expectations for leases, working capital and capex remain unchanged. In summary, our focus on unit economics, scaling our platform and AI integration is supporting our profitable growth goals as proven through our first half results. We've demonstrated that we have the foundation required to navigate varying levels of demand. 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 page. Thank you.

Thank you. Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad. We'll pause for a brief moment, thank you. We'll now take our first question from Anne Critchlow of Barenburg. Your line is open, please go ahead.