Global Fashion Group: Q3 review: Margin gains carry profitability through soft demand - NuWays AG Research
GFG’s Q3 figures show that the improved unit economics hold up even as demand softens, with normalized free cash flow being positive for the second consecutive quarter.
ANNONS
Q3 group NMV came in at € 243m, down 5.4% yoy (on cc) after -0.6% in Q2. In euro terms, NMV grew c. 2% to € 243m, as AUD and BRL turned supportive. Active customers fell 7.2% to 6.9m and orders by 9.2%, while average order value (+4.1% cc to € 68.6) and order frequency (+1.8%) rose again. According to management, costly energy and high interest rates continue to squeeze household budgets for non-essential purchases. Q3 sales of € 157m (-7.7% cc) again lagged NMV, partly as SEA’s marketplace business reached a record share.
Action: We trim growth estimates, as the NMV and sales decline was stronger than expected weak consumer sentiment in LATAM and SEA. Our adj. EBITDA estimate remains unchanged. Demand remains soft, but the quarter confirms that profitability no longer depends on volume growth: group gross margin and adj. EBITDA rose despite 5% lower NMV (cc). Positive NFCF in a seasonally weak Q3 underlines that the € 30m adj. EBITDA hurdle for FY NFCF breakeven remains within reach.
We confirm BUY with an unchanged € 1.00 PT based on DCF.
