Global Fashion Group (GFG) continued to be affected by challenging market conditions in the second quarter, as reflected in net merchandise value drop for the SEA (16.9 per cent), ANZ (9 per cent), and LATAM (19 percent) markets.

The decline in SEA, where the company operates Zalora, shows its prioritisation of profit over growth in a weaker demand environment. 

Positive profit contributions from the growing marketplace and platform services were broadly offset by fixed cost deleverage from lower volumes.

In ANZ, rising interest rates, elevated inflation, and GDP growth declines contributed to the decrease.

Overall, GFG recorded net merchandise value of EUR346.5 million, down 14.7 per cent year over year. The numbers of orders and active customers dropped 28.1 per cent and 19 per cent, respectively.

Revenue was down 18.6 per cent to EUR223.8 million.

Gross margin shrank 1.4 points to 42 per cent, driven by higher levels of promotional activity.

“Macro pressures continue to impact customer behaviour in GFG’s markets, which is reflected in our Q2 results,” said CEO Christoph Barchewitz.

“While our topline is challenged in the near-term, our commitment to improving each of our regions’ propositions for demand recovery, remains strong. These improvements will grow our platform and are adapted to our current focus on careful cost and inventory management.”

In H1, GFG reduced inventory levels by 33 per cent and intake by 30 per cent as part of its cost action plans to cope with lower volumes.

The company kept its previous full year guidance, with net merchandise value expected to decline 10 to 15 per cent.