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Zalora parent says sales are rising, but margin narrowing

Zalora parent Global Fashion Group says Asia-Pacific sales growth averaged 40 per cent in the final quarter of last year.

However, gross profit margin declined by 8.2 percentage points to 35.2 per cent, due to competitive promotional pricing during key trading periods and promotional events as well as product mix effects, the company said in a European regulatory filing.

Zalora, which operates in Hong Kong, the Philippines, Singapore, Taiwan, Indonesia and Malaysia, returned a 37.8 per cent increase in turnover, while its Australian business The Iconic reported 40.7 per cent growth.

The two business recorded net revenue (as opposed to online sales) for the full year of €108 million in reporting currency, or 23.9 per cent.

GPG does not split out profit figures for its Asia-Pacific business, nor does it separate details of the Asian and Australian operations, so it is impossible to tell from the figures released in Europe this week exactly how Zalora is performing.

However outgoing CEO of GFG, Romain Voog, told Inside Retail Asia in December that the company is making progress on its path to profitability.

“We are now in single-digit EBITA negative results, which is a steep improvement to the minus 40 we were three years ago. I am not interested in being a profitable small business – I am interested in being a large, high-growth business, so I think the priority will always be to make sure we stay the leader and reinforce that leadership position. Sometimes that might mean delaying break-even point to make sure you reinvest in acceleration of growth.”

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