Cutting costs, Selling off businesses: Global Fashion Group is trying out a road to profitability.
Rocket Internet reported numbers for the first half of 2016 for its former ragtag group of fashion startups, Global Fashion Group (GFG); one week before Rocket Internet reports its own numbers. (Appendix PDF with numbers can be found here.)
Rocket Internet-backed (RKET.DE) Global Fashion Group (GFG) reported net revenue rose 36.6 percent on an adjusted, constant-currency basis in the first half of 2016, as operating losses nearly halved, excluding disposals in India and Southeast Asia. (…)
The company said adjusted losses before interest, taxes, depreciation and amortisation (EBITDA) narrowed to 67.6 million euros in the first half of 2016 from 120.5 million euros in the year-earlier period.
The main point is here:
The EBITDA margin improved to a negative 14.8 percent in the first half of 2016 from negative 33.4 percent in the first half of 2015, which the company said was driven by tighter inventory management and cost-cutting in its drive to profitability.
This doesn’t sound like a growth company anymore.
Understandably, GFG’s investors are a bit angsty by now. Here are some operating figures via (GFG’s largest investor) Kinnevik’s quarterly report for Q2 2016 (PDF):
Here are GFG’s current numbers, excluding Jabong for H1 2015 and H1 2016 (via (PDF)):
Global Fashion Group has been selling off parts of its business for some time now. The group sold its operations in Thailand and Vietnam. The Indian fashion business Jabong got sold to Flipkart-owned Myntra.
After July’s funding round (€330 million from existing investors), Rocket Internet now only holds 20.4 percent of GFG.
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