Global Fashion Group Shows Positive EBITDA Despite Sales Decline

Global Fashion Group S.A. (GFG) recently released its Q3 results, revealing a mixed performance. Notably, the company reported a positive adjusted EBITDA of €1 million, marking a 0.6% margin, despite a 10% year-over-year decline in net merchandise value (NMV) to €239 million. This improvement in EBITDA was driven by increased gross margins and effective cost control measures, including a 10% reduction in headcount. However, sales decreased by 10% to €157 million, influenced by foreign exchange challenges in Latin America and Australia/New Zealand.

In the regions, Latin America saw an 11% decline in NMV, mainly due to a reduction in active customers. Conversely, Australia/New Zealand experienced a smaller decline of 3.5%, cushioned by a growing customer base. The Southeast Asia region faced a significant 20% drop in NMV, largely due to a decreased customer base and adverse foreign exchange effects.

Looking ahead, GFG's management remains optimistic, forecasting adjusted EBITDA to reach positive single-digit million figures for FY 2025. This outlook is supported by strategic improvements in gross margins and marketplace share gains. The overall investment case is strengthened by the potential for re-rating, given the current undervaluation of GFG in the market.