Zalora parent Global Fashion Group (GFG) has cut its pre-tax loss margin from 26.9 per cent in 2015 to 12.5 per cent.
The improvement was fuelled by a 30.3 per cent increase in sales (calculated on a currency neutral basis) across the group, which operates the Dafiti, Lamoda, Namshi, Zalora and The Iconic – all described as “market leaders in their respective regions”.
The sites achieved a combined net merchandise value of in excess of €1 billion, representing growth of 26.4 per cent on a constant-currency basis despite what the company described as “continued macroeconomic challenges” in several regions and associated increased pricing pressure.
Gross profit margin increased by 2 percentage points to 42.4 per cent driven by improved commercial terms leveraging the group’s increased scale and improved merchandising. The remaining 12 percentage point improvement was driven by efficiency gains across GFG’s fulfilment operations, marketing investments, and fixed cost structure in line with its path to profit initiatives.
Brand recruitment focus
GFG said 2016 saw the implementation of several regionally led initiatives, including brand recruitment across all regional companies, warehouse automation and capacity increase at Lamoda and Dafiti, optimisation of the last mile delivery infrastructure with Lamoda Express, IT investment and integration of Kanui and Tricae IT into Dafiti, fixed cost rationalisation with the setup of a Malaysian shared-service center for all of Zalora.
“These developments helped enhance GFG’s efficiency and improve its services to both partner brands and consumers.”
GFG delivered good progress on coordinated brand acquisitions with 40 top tier brands acquired and strategic reviews with key partners to leverage the global scale and relevance of GFG.
“The GFG Marketplace roll-out has been finalised in Russia and LatAm. Being positioned as a curated fashion marketplace platform has allowed significant growth across regions and proven a successful model to access a wider assortment from new or existing brands.
“GFG has launched various shared IT initiatives across its regions to leverage know-how and scale, focused on key developments to enhance customer experience. This includes the set-up of a European tech center which is complementing the existing one in South East Asia.”
As previously reported by Inside Retail GFG announced a strategic partnership with one of the Philippines’ oldest and largest conglomerates, the Ayala Group, in February.
Ayala took a 49 per cent ownership of Zalora Philippines, solidifying Zalora’s leadership position in the archipelago, with potential synergies with Ayala’s telecommunications, banking and retail business units that will offer more value and better service to GFG’s Filipino consumers.