GLFGF (GLFGF) Q2 2026 Earnings Report, Transcript and Summary

Good morning, everyone, and welcome to Global Fashion Group's Q2 and H1 2026 Results Presentation. I'm Christoph Barchewitz, CEO of GFG, and I'm joined today by our CFO, Helen Hickman. I will start with highlights for today and then share an update on progress we are making across the business. Helen will then take you through the regional and group financial results and our guidance for the full year. After that, we will open the call for questions. Overall, we are executing on our strategy and delivering financial results in line with our expectations and guidance. We've continued to improve our unit economics with sales and profit per customer and per order growing strongly, creating the foundation for profitable growth. We've made significant progress in enhancing our delivery proposition, strengthening our marketplace and scaling our platform services offering. While today's focus will be on Fulfilled by, our platform services also continue to grow, driven by Retail Media across all 3 regions and our single stock solution in Southeast Asia. Combined with the integration of AI across our business, initiatives across these areas continue to strengthen our customer value proposition and profitable growth strategy. I'll be sharing more detail on these topics in a moment. On financial results, we delivered our first profitable H1 with our current footprint. For the LTM period to June, adjusted EBITDA improved by a strong EUR 23 million year-over-year and normalized free cash flow by EUR 28 million. Lastly, we have narrowed our 2026 guidance to take account of H1 results and our current expectations for H2. For NMV, we now expect a year-over-year change of negative 4% to 0%. For adjusted EBITDA, we now expect a range of EUR 18 million to EUR 25 million. Helen will explain these changes in more detail. Turning to our Q2 financial highlights. NMV was broadly stable with a 0.6% constant currency decline, while adjusted EBITDA margin increased by 1.8 percentage points. Our focus on unit economics is delivering results. Increased order frequency and cost discipline are offsetting the impact of fewer active customers and orders. Next, we have our business update. Over the last several years, we have focused on increasing the value and contribution generated from each customer and order while also reducing our fixed cost structure to drive substantial profitability and cash flow improvements. While this transition has resulted in about a quarter reduction in active customers and orders, it has also fundamentally strengthened our unit economics. This progress is visible across the entire group as shown with consistent trends on profit contribution in all 3 regions. NMV and gross profit per unit have increased, reflecting our more targeted approach to customer acquisition and deepened repeat engagement. These improvements become materially more pronounced further down the P&L. After fulfillment costs, profit contribution per active customer has increased by 47% over the last 3-year period, while profit contribution per order has increased by 53%. After both fulfillment and marketing costs, the improvement is even more significant, with profit contribution increasing by 91% per active customer and 99% per order. These results were enabled through a broad range of initiatives, including greater automation, improved terms with our delivery partners and marketing allocation towards the channels and customers that generate the strongest returns. We will continue to optimize unit economics while reinvesting efficiency gains into customer experience and marketing. Turning to our delivery proposition, which is a critical driver of both customer experience and unit economics. We continue to deliver a high-quality service with on-time delivery exceeding 90% across all regions and delivery speeds improving by more than 20% in ANZ and SEA compared with 2023, while remaining stable in LatAm. We are also elevating the customer experience through greater choice and transparency. Real-time tracking provides end-to-end order visibility, while our expanded Fulfilled by GFG and drop ship partnerships are strengthening the marketplace delivery experience. We continue to invest in more delivery options. We have rolled out next-day delivery in additional key metro areas, introduced flexible express tiers and increased the number of automated parcel lockers. Importantly, we delivered these service improvements while continuing to build a more efficient model, having reduced fulfillment costs by 3 percentage points of NMV over the last 3 years. This has been achieved through vendor negotiations, route optimization and an expanded asset-light partner network that allows us to scale capacity without increasing fixed costs. All of these initiatives create a superior delivery experience that drives conversion and growth. Our Fulfilled by service leverages our delivery and fulfillment infrastructure to manage logistics for marketplace brand partners, enabling them to bypass internal operations while providing a more consistent shopping experience for our customers. Fulfilled by is live in all 3 regions, though they are at different stages of maturity. ANZ launched in early 2023 and adoption has been accelerating so that it now represents 15% of marketplace NMV with 88 brands live. In LatAm, the offering has continued to gain traction since its launch in June '24. Fulfilled by now accounts for 6% of marketplace NMV across 70 brand partners. SEA is our most established market, having launched the offering in 2019. Fulfilled by contributes 29% of marketplace NMV. With 81 brand partners live, our focus has been on optimizing the assortment and brand mix to support stronger unit economics. Overall, Fulfilled by is a key contributor to the group's growing marketplace business. Together, Fulfilled by and platform services deepen our relationships with brand partners, improve their ability to reach and serve customers and support a more scalable, higher-margin revenue mix for GFG. Now looking at our integration of AI into our workflows across the business. In LatAm, we have transitioned to an AI-enabled workflow for image and video generation across our product catalog and marketing campaigns. The impact in Brazil has been significant, where e-production costs have reduced by over 50%. Beyond cost savings, this greater agility allows us to bring products to market faster and refresh content more frequently at scale. As AI opportunities extend beyond how we create content, we are also focused on how we improve how customers discover our products. In ANZ, THE ICONIC is the only Australian fashion retailer participating in Google's Universal Commerce Protocol or UCP pilot. The UCP enables customers to discover select THE ICONIC products through Google's AI services, including Google Search and Gemini, and move through to an integrated checkout journey. THE ICONIC remains the merchant of record and manages the entire fulfillment and post-purchase customer experience. This pilot allows us to learn from and help shape this emerging channel as shopping journeys evolve. As discovery shifts toward AI-driven search, we are also prioritizing Answer Engine Optimization or AEO to ensure our platforms and assortment remain discoverable in these new environments. We are also applying AI to the commercial decisions we make every day. In ANZ, our automated pricing tool now covers 100% of our retail assortment. This enables faster data-led pricing that helps our team better balance competition, margin and sell-through. Beyond pricing, we are applying AI across broader commercial workflows, including product descriptions, campaign selection and buying optimization, all to improve the speed and quality of our decisions. In summary, we are successfully driving a more efficient and profitable business through each of these strategic initiatives. I'll now hand it over to Helen, who will take you through our financial results.

Thanks, Christoph. First, let's look at our regional segment results. Starting with ANZ, our largest region, generating about half of our NMV. ANZ delivered 3% year-on-year NMV growth in both H1 and Q2 on a constant currency basis. This was supported by 2% active customer growth and strong engagement across targeted campaigns. In a more challenging discretionary spending environment, ANZ's performance reflects our highly relevant brand and assortment proposition that continue to resonate with customers. Higher living costs and interest rate increases have weighed on consumer confidence so far this year. Gross margin remained broadly stable at 48%. We saw growth driven by a greater mix of higher-margin categories, including own brand and women's apparel, alongside increased marketplace participation, offset by our continued investment in the loyalty program launched last year. As a result of further cost efficiencies, mainly in fulfillment, ANZ's H1 adjusted EBITDA margin increased by 2 percentage points to a strong 5%. Moving on to LatAm. Our performance in H1 reflects clear resilience on profitability while facing external headwinds. LatAm delivered a solid 3 percentage point step-up in adjusted EBITDA margin and was profitable in H1 despite NMV being down 2% and revenue down 7%. In the second quarter, NMV was down 1% and revenue down 5%, reflecting external headwinds, including record household debt and the World Cup, which redirected consumer attention and spending. It was also a highly competitive environment driven by the tax change favoring cross-border players. Now turning to SEA. Similar to LatAm, SEA delivered profitability improvements despite facing top line declines. In H1, adjusted EBITDA margin reached 3%, improving 3 percentage points year-on-year. NMV declined 11% on a constant currency basis. SEA has made strong steps in reducing the fixed cost base to ensure we are well positioned as growth returns. Across all regions, we've demonstrated this half that we can deliver profitability in competitive markets through business model shifts towards more marketplace and platform services and operating cost improvements. Now turning to the group results. Order frequency increased by 1.8% year-on-year to 2.4x. We're seeing the customers who shop with us becoming more engaged, whilst active customers declined 5.5% year-on-year. We're continuing to rebalance our customer base towards profitable growth. Turning to NMV. Q2 moderated to a 0.6% decline on a constant currency basis following a 3% decline in Q1. For H1, NMV declined by 1.7% year-on-year. 5.3% higher average order values substantially mitigated the effect of 6.6% less orders resulting from lower traffic in the first half. Average order value was supported by 3 main drivers. In order of impact, this included a more favorable regional mix, price inflation and less discounting. Turning to revenue and profitability. H1 revenue declined by 3.5% year-on-year on a constant currency basis, reflecting the lower NMV and increased marketplace mix. We improved gross margin by 0.2 percentage points year-on-year to 47.2%. Increased marketplace and platform service share offset a decline in retail margin. We improved adjusted EBITDA margin by EUR 9 million year-on-year to positive EUR 1 million, delivering our first positive adjusted EBITDA result for a first half within our current footprint. This represents a 2.8 percentage point margin improvement year-over-year. We delivered this through the benefits of evolving revenue mix and structural improvements to our cost base. We also continued to benefit from FX tailwinds this quarter. Now let me take you through our cost actions in more detail. Our total cost base continued to reduce significantly, significantly more than our NMV decline for H1. Fulfillment costs reduced by 1.3 percentage points as a share of NMV, reflecting continued automation and efficiency improvements across our logistics network, specifically reducing delivery and personnel costs. Technology and administrative costs also reduced by 1.3 percentage points, benefiting from headcount reductions and further simplification of the business. Marketing remained broadly stable at 6.9% of NMV, allowing us to maintain investment in the customer and growth initiatives that generate the strongest returns. We expect to deliver further efficiencies as volume returns. Turning to cash flow. In Q2, our EUR 3 million improvement in adjusted EBITDA drove a corresponding improvement in normalized free cash flow as other key components, including leases, working capital and CapEx remained stable year-on-year. On a last 12-month basis, we're making strong progress towards a breakeven position with normalized free cash flow improving by EUR 28 million year-on-year to negative EUR 19 million. Our cash position remains robust. We closed Q2 with EUR 105 million in pro forma cash and EUR 89 million in pro forma net cash after accounting for third-party borrowings. Turning now to our full year 2026 guidance. On NMV, we have lowered the top end of our range to reflect H1 performance and our revised expectations for a more challenging second half. This range continues to consider factors specific to our markets, including the upcoming general election in Brazil and sustained cost of living pressures in ANZ. We now expect year-on-year constant currency NMV of negative 4% to 0%. On a reported basis, incorporating H1 actuals and using June 30, 2026, closing exchange rates for the remainder of the year, this translates to EUR 1.05 billion to EUR 1.09 billion. Whilst our original guidance provided in March is December '25 exchange rates, ongoing strength in the Australian dollar and the Brazilian real offers a potential currency tailwind to our reported euro values if sustained here. On adjusted EBITDA, we've raised the bottom end of our range, and it now stands at EUR 18 million to EUR 25 million, representing a year-on-year improvement of EUR 9 million to EUR 16 million. This revised range reflects our H1 performance and the importance of Q4 trading. Our full year expectations for leases, working capital and CapEx remain unchanged. In summary, our focus on unit economics, scaling our platform and AI integration is supporting our profitable growth goals as proven from our first half results. We've demonstrated that we have the foundation required to navigate varying levels of demand. We'll now open the call to your questions. If you like to submit a written question please click on the speech button at the bottom of the page. Thank you.

[Operator Instructions] We now take our first question from Anne Critchlow of Berenberg.

I have a few questions, and perhaps I'll just ask them one by one. First of all, please, could you comment on how you're performing versus your competitors in the different regions?

Sure, Anne. So I would say it's a mixed picture, as you would expect. In ANZ, the reporting cycle isn't yet fully done. So we don't have a complete picture on the public companies. But I think generally, we feel like we're performing above average. A couple of them have reported weaker sales and especially recent trends being fairly weak. And so with the growth that we've shown, we think we're a little bit ahead of where the market is in that region. However, big pressure in the whole industry have intensified in June and July in the region, and that's what a couple of people have commented on and it's also consistent with our own experience. In LatAm, some of the competitors and peers have reported softer top line, where we continue to see strength are in the general merchandisers and in the cross-border players, in particular, since there's been a temporary favorable tax decision, which again improves the relative competitive position for the cross-border. And in SEA, I would say, again, the large platforms doing reasonably well. Beyond that, a bit hard to tell given the fragmented nature of the market. But clearly, with our trends, we don't think we're gaining share. We think we're losing share in that market, and that's obviously a key focus area to turn around.

That's very helpful. Have you stepped up price investment? I'm just wondering how you're balancing price investments versus, say, use of the loyalty programs in the various regions.

Yes, so what we do is we really drive it off, number one, competitive pricing. So as the market becomes more aggressive, we will match, and we've seen a bit of an increase in that. Secondly, we obviously look at our inventory position and want to continue to keep that as healthy as it has been over the last couple of quarters. And as you've seen from the numbers, Q2 ending position has been clean and healthy, but we do take a little bit of pressure on the retail margin as a result. We obviously also always go back to our brand partners and try to kind of share a little bit the dynamics in the market and share the burden of that. So there is a bit of that. There isn't an active down pricing or changing in the price positioning. I would say it's more business as usual with these parameters applying. But clearly, the tougher the competitive environment and the weaker the consumer sentiment, the more pressure on retail margin we see.

That makes sense. And I just wondered also, is it possible do you think to use the automated pricing tool that you've used in ANZ? Would you transfer that into LatAm? And could that improve the gross margin in time?

It's definitely something we're looking at. We have a pretty sophisticated pricing operation in LatAm already, and it's also a bit slightly different setup and market when it comes to that. But it is something we're definitely considering. In Southeast Asia, actually, we're using a fairly automated but internally developed pricing tool already. So the pricing mechanism is a really important driver of efficiency and also of margin. But in the end, the basics of buying right, merchandising right and getting the right consumer is still the bigger driver than just the tooling.

Great. Could we move on to free cash flow? Just wondering how confident you are that Global Fashion Group can start to generate free cash flow in the medium term and whether anything has changed on the cash flow front?

Anne, Helen here. So yes, we're still confident and that's very much our goal. So you'll have seen if we take the last 12 months on our normalized free cash flow, we're now, we step forward EUR 28 million from that time to minus EUR 19 million. And as you know, we generate all of our cash in the second half, mainly in the latter quarter of the year. So given that based in line with our profit guidance and our guidance with regards to sort of cash -- CapEx and leases, which will remain in aggregate at about EUR 30 million broadly, we think of it that we need at least EUR 30 million adjusted EBITDA to offset that fixed cost. Then we'll then get some small benefits around working capital, but we have a sort of a run rate of about EUR 10 million of interest tax and others. So you have those component parts. And if you think where we are on the guidance, that should give a good indication to us really being able to step much closer to that breakeven target.

Great. I do have a few more questions, but just wondered if I should take a break and allow anyone else to ask a question on the call.

Why don't you just run through it and then we'll go through others.

Okay. Great. So looking at the active customer decline, I'm just wondering how long you might be taking action on the unprofitable customers and how long that might continue to impact the active customer numbers?

Yes, that's a very good question, Anne. I think it's distinct on a regional basis. So in ANZ, we're obviously more in the kind of growth or at least very stable customer base depending on which quarter you exactly look at. But I think there, we feel like the economics are healthy. There's always more to be done, and we definitely would love to free up more room to invest in growth. We're seeing strong growth, for example, in New Zealand. So we think there's more opportunity in that market to acquire incremental customers, but also in Australia, certainly as a core market in the region. In LatAm and SEA, I think we have more work to do and further to go on really driving the customer profitability and the order profitability to the right levels. We've made huge amounts of progress in both regions over the last few years already, but there's still more room to go. And so I think it is likely in those markets that we will see, first, probably stronger NMV trends and then secondly, stronger order trends and then thirdly, active customer trends. And that really follows the logic of we're driving frequency, we're driving average order value growth. And so then naturally, as those metrics are the focus to drive the overall profitability, the active customer number will be the most lagging and turning into positive territory, if that makes sense.

It does. On climate, we are beginning to see a bit of climate-related disruption in the supply chain in the industry. And also on the climate piece, are you seeing any disruption to trading due to extreme weather patterns sort of cognizant that you're in a different hemisphere than the European businesses that we usually cover?

Yes. We've probably, over the years, seen quite a lot of extreme weather patterns in our markets. We have some wildfire seasons in Australia that have been quite extreme. We have typhoons and have regularly typhoons and other events. We had an earthquake in Colombia this week. So there are things that are not always climate, obviously, in the case of earthquake, but that are kind of, let's say, completely natural environment driven. I think there's always a short-term disruption operational and demand when something dramatic like that happens. So that's a very consistent theme, but we also, I think, are very resilient in responding to it and have just kind of experienced quite regularly, maybe a bit different from the European retailers. What we have seen also in the more longer-term trends is that the warmer winters in Brazil and Australia have really shrunk the share of the winter assortment in those categories and making it even more critical to really get that product in those categories sold in the right timing because of the winter just becoming a much shorter period. And for example, most recently, April in Brazil was very, very warm. And as a result, the beginning of our winter sales were quite soft and then that obviously spills into the later part, and we have a bit more markdown to do there and have done already in June and July. So yes, the answer is it has an impact, but we're experienced managing those impacts because it's not new.

That's very interesting. Looking ahead to the next season, are you expecting price inflation to come through from, say, higher polyester costs and disruption from the Iran conflict?

Yes, it's not something that we're seeing dramatically come through. Obviously, we need to be mindful of it. But where we are, we're trying as much as possible through supplier negotiations to secure strong prices. And also, we generally tend to pass cost price inflation ultimately on through our sales price. So it's not a significant issue as we're facing into the second half.

We will now take our next question from Russell Pointon of Edison Group.

A few questions on Southeast Asia, if that's okay. You're still getting relatively high rates of decline there in the active customers. And I appreciate it's a lagging indicator as you often say. But could you just give some idea of what you're seeing below the headline number in terms of client losses versus potentially new customers coming in? And perhaps give some detail on the individual countries. That would be my first question. The second question is the gross margin. Obviously, the revenue trends are challenging. The gross margin improved a little bit. Just interested in your thoughts on how satisfied you are with that in the context of the changes to the product offer and the relationships of brands you've made over the last year. And my third question is, essentially in H1 this year and H2 last year, you've had around a 20% decline in operating costs. Perhaps just talk about what you've done there. And given those numbers have been consistent across the 2 halves, are you starting to annualize these gains and perhaps where there are opportunities coming forward?

Great. Maybe I'll start, Russell on the Southeast Asia trends, and then I'll let Helen answer the question on the gross margin and then on the operating costs. So within, when it comes to Southeast Asia, yes, active customer decline is still pretty strong. It is across the markets. So obviously, Philippines, Indonesia, Singapore and Malaysia are the 4 larger markets and then Hong Kong is a smaller market for us. But we've seen this across all markets. It is in the context of the natural relatively high churn that's inherent in our business model, but it is elevated. And clearly, we are not able to acquire and reactivate customers at the level of marketing spending that we're willing to commit at this point. And so our constraining of the marketing spend and the payback periods around that is what ultimately leads to this erosion of base where basically churn is just higher than reactivation and new acquisition of customers because of the marketing spend. We're obviously intensely working on improving retention, improving second order conversion, improving loyalty. And we have many actions and programs underway, including a couple of changes planned for the rest of the year in terms of how we think about loyalty program. We have our ZALORA VIP program in the region, et cetera. So generally, it's a continuation of the trends. We do believe that we are able to retain higher value customers. So I would say the quality of the customer base is improving, but it's obviously very concerning to see the level of decline, and we want to stop that as quickly as we can, but we need to do it within the disciplined financial framework we are applying, and that's nonnegotiable around it. I hope that helps. I'll hand it over to Helen.

So first question being gross margin in Southeast Asia is in line with our expectations. So yes, it is in line with our expectations. I mean it's, for the first half, it's 0.7 percentage points, which actually is the highest of our 3 regions in the first half. I think if you unpack it, we know that the retail margin in Southeast Asia is slightly lower than that in some of our other regions. And I think that's definitely an area of focus for us. Southeast Asia runs with a slightly higher aged inventory position than the rest of our regions. So we do see clearance and some provisioning through that. So that's improving, and that's an area of focus for us to continue to improve that retail margin. But on the counter, it runs the highest platform service and marketplace participation, which actually is highly accretive to margin. So blend all those together. And it is, it has set forward and it is in line with where we want it to go. But obviously, we're pushing for further improvements. Your second point then was with regards the cost improvement, which has led to the 3 percentage point adjusted EBITDA margin improvement in the first half and also seeing similar cost improvements in the second half. So we've done a lot of work with regards to fixed costs and around headcount. So we've done organizational change. So we did a large structural change at the start of this year, which whilst we've got the benefits in the first half, obviously, we'll then see benefits into the second half, which I think addresses part of your question. We've done a lot of work around renegotiating things like with our delivery partners, et cetera. So there are definitely some annualization from last year, which obviously will tail off into this year, but we do have a program of works that then just won't turn off. So it will be in and around, we'll continue to look at administrative functions and how we simplify, how we automate and obviously, some of the AI initiatives that Christoph spoke about, how we can continue to roll those out across all of our regions, including Southeast Asia.

Okay. Just can I have a follow-up question on Latin America, please, in terms of the gross margin. It went down there for the first time in quite a long time actually and you've done quite a good job of increasing the gross margin over time with all the competitive challenges you have. So what is the greatest effect on the gross margin in Latin America? Was it just this, was it the competitor activity? Or was it that you talked about a slight weakness from a top-down perspective?

Yes, so for the half, it was -- so in the quarter, you're right, it did step down marginally up for the half. So it's definitely, in the first half, it's a Q2 issue. So it was highly competitive. So we did, we took some margin investment a little bit to drive trade. So the World Cup is disproportionately huge in Brazil and Colombia to some extent, where actually spending tends to move away from clothing on to other areas. So there's a little bit around driving trade and also then the sort of the byproduct of that because trade, especially from our retail side of our business wasn't as strong as we'd anticipated. We also took some relatively aggressive markdown just to maintain, to stop our sort of age inventory creeping up. So I'd say the Q2 position very much is around sort of the competitive environment and driving trade.

[Operator Instructions] We'll take a follow-up question from Anne Critchlow of Berenberg.

Just one more question from me, please, on marketing activity. So is there anything that's working for you, in particular, in the type of media, sort of thinking right across sort of outdoor and then the split between SEO and AEO, as I think you call it now, social media, whether it's retargeting, anything that really stands out?

Yes. Thanks, Anne. I mean, I would kind of call out 2 or 3 points here. Number one, we have moved a bit more top and mid of the funnel. So basically going back into more brand and in some ways, maybe more traditional channels, in particular, in Australia. I think, as you know, we've had the Got You Looking master brand and underlying campaigns there running for quite some time and launched that in a first trial in Southeast Asia in the first half as well. And as part of that, in particular in Australia, we are also doing things like even radio, podcast, outdoor collectively to reach also sometimes different audiences and really elevate the brand and be present across a lot more media touch points. The core overall remains obviously performance marketing in terms of the spend. And within that, we continue to optimize the tooling and the approach. And it's a never-ending journey. Obviously, there's always new capabilities that are coming through. Where we, I think, are getting much better are 2 dimensions of that. One is to really go after profit versus just sales; and number two, to really target customers and potential customers who we want to have and i.e., who have the potential to be profitable, high-value, long-term customers. And secondly, avoiding spending on winning over transactions that we would have gotten anyway because we would have reached those customers through CRM or just any other organic channel as well. So I think the granularity and the targeting around it, around the profit dimension and the selection of the right customers is ever improving. AEO is still a very small part, and that's currently more of an organic effort to really make sure that all of our products and presence online on our platform, but also off-platform review sites, all of that is as supportive as possible to make it very, very clear that we are the leading fashion and lifestyle destination in each of our markets.

We have no further questions on the line. I'll now hand over to Saori for webcast questions.

So first question we have from Christian, NuWays, what are the drivers behind the increased order frequency?

Okay. I'll take that. So I think, Christian, the #1 focus is here on the customer quality and retention. So it's kind of part of the overall drive of targeting higher-value customers who naturally have a higher frequency. We have fewer, let's say, new customers that are just coming for 1 order and churning through, and they obviously drag down the average. So this number going up is positive in many ways. And I'm not sure it will go up every single quarter, but definitely the objective for us is to drive it up. And if you compare us to some of the more developed market peers, I think we have quite some room to go in improving this metric.

Next question also from NuWays. How do you expect ANZ and LatAm Fulfilled by to develop going forward? Do you have NMV share targets?

We definitely are pursuing this opportunity very, very ambitiously. We are, have recently hosted and will be hosting big events in both Brazil and Australia for brand partners, both existing ones that may not be using this particular model yet and for potential new partners. It is more of an enterprise sales cycle, if you want, in terms of people obviously need to sign up to the service, they need to bring the stock physically into our fulfillment centers, et cetera. It is just such a better experience for the customer. And so our goal is to maximize the share of orders where we control the fulfillment and delivery experience and to minimize effectively uncontrolled drop shipping where we don't really have the ability to track where the orders are. So just to be clear, in drop shipping, in some cases, we can track the orders and some we can't, and that's really the weakest customer experience. And as always, there will be a mix effect. We don't have a particular target, but we do think that marketplace as a whole will continue to grow in share towards about 45%. And within that, the share of Fulfilled by going up relative to where we are, and you've seen the regional numbers in the presentation today.

The next question we have from [indiscernible] from [ ICF ]. How is current trading?

So current trading still remains relatively soft and is quite challenging, reflecting the sort of the macro environment that we've spoken about today, and that's now built into the revised guidance that we've given this morning. I think it's clear to say, though, as we've been articulating for the past few quarters, our focus very much is to be able to navigate that top line softness and ensure that our focus very much remains around improved profitability and a strong focus around cash.

So a few questions on cash. Q2 normalized free cash flow turned positive for the first time. Could you break down how much of that improvement was operational versus working capital timing? And given the working capital tailwind has largely run its course, how do you think about reaching structurally sustainable free cash flow breakeven?

Okay. So let me take both parts. So for the quarter, yes, we did generate EUR 2 million normalized free cash flow, and that's really broken down by the adjusted EBITDA in the quarter of EUR 6 million that we saw and about EUR 6 million inflow from working capital, and that more than then offset our fixed costs around, cash costs around leases and CapEx. With regards to the ongoing piece, it aligns really to Anne's earlier question, whereby we see the sort of the main driver of becoming cash flow breakeven is through our increased adjusted EBITDA and our increased profitability flowing through to cash. We've done a lot of work to maintain and limit our investments around CapEx and leases, which broadly we're forecasting to be broadly in line with last year, is about EUR 30 million. On the working capital, obviously, we're, it's highly seasonal for our business. We do still anticipate this year a small working capital inflow, slightly higher than we saw last year at EUR 3 million. And we will continue to, whilst we've done a lot of work over the last couple of years to really bring our inventory levels down, which has released significant amounts of working capital, we will always look to optimize our working capital through ongoing supplier negotiations, ongoing optimization of inventory and the way in which we manage our business between the retail and the marketplace platform.

Next question, also along the lines of cash flow. Your cash flow is still negative. Do you expect GFG to be cash flow positive this year? If not, when?

Okay. So we've, historically, and we don't specifically guide on our normalized free cash flow. But if you take the component parts that I've just described, obviously, it depends at the end of the adjusted EBITDA that's within our guidance between EUR 18 million and EUR 25 million. But even within that range, we're going to make significant headway to the minus EUR 30 million that we saw last year. And you can see that on our last 12 months rolling measure where we've stepped forward significantly.

Next question. A few about overall the share buyback program. So how are we prioritizing the share buybacks against reinvestment? Is the buyback authorization being actively used and are repurchased shares being canceled or retained to satisfy employee incentive plans? Related to that, what's the position and future role of major stakeholders of GFG?

Yes, I'll take that. So yes, the buyback program that we launched in Q1 is continuing. You can also find the weekly updates on the volumes and the prices on our Investor Relations website. To date, we have purchased 1.7 million shares. And these are retained in treasury for use, including for employee incentive or anything else for now. There is clearly a limitation around the daily trading volume. So the volumes that we're actually able to buy back are not that high, but the volumes that we can buy back are being bought back. And in terms of major stakeholders, I really can't speak to them. You need to speak to them. I think, as you know, our 2 largest shareholders have been very long-term shareholders since well before the IPO in 2019, and we don't expect any change in that position or situation from what we know.

Next question, how will you make use of the past tax losses and potential future tax credits on the GFG group level in Luxembourg, but not in the regions you are operating in?

Yes. We have these in Luxembourg. I think we've explained this at various points over the last couple of years and continue the disclosure on that. We think it's very difficult to make use of these tax credits. Under Luxembourg rules, it is also not possible to get any binding and clear guidance from the tax authorities about whether they could be used for certain purposes. So I wouldn't attribute too much value to these tax losses. It's different in the regions where we also have tax losses and those are, by and large, usable and also have quite long life. So as the business is shifting into profitability and starting to generate taxable income in the next couple of years, some markets, obviously, that's already the case. These will be relevant in minimizing our income tax.

Next question, how do you view the risk posed to GFG's figures by the ongoing war in Iran and the recent weak consumer confidence in Australia? Also, the trend in cash flow shows that GFG will report little to no cash burn in 2027. How does GFG plan to use its still very high cash position?

Thank you. So obviously, with regards to the Iran situation, we continue to monitor and assess the position. There's no material impact that we're seeing with regards to supply at the time being. The key area we focus on really is the secondary impacts on consumer confidence and some of those we've described today. I'd say high oil prices across our regions, but especially in places like Australia are impacting consumer confidence, and that's a very big area of focus for us. With regards cash and cash burn, so we're very cautious around managing our cash position. And at the moment, we're focused on strategic initiatives such as the share buyback that Christoph has just spoken about and prior to that, the buyback of a significant portion of our convertible bond.

Next question from what year do you expect to see a similar trajectory of profitable growth in LatAm and SEA? Overall, can you give some perspective on the longer-term outlook for these regions? And have you considered strategic alternatives for any of the regions like a sale of SEA or fully focusing on ANZ?

Yes. So in terms of the longer-term opportunity in both of those regions, it is a very significant opportunity very clearly. As an industry, fashion e-commerce penetration still lags many of the more advanced markets like China, but also Australia, Europe and the U.S. And so we think there's a long-term continued growth opportunity for fashion e-commerce in these geographies. We also think there's a very significant opportunity to enable the broader ecosystem and our brand partners through our platform services, including the marketing services, the fulfillment services, et cetera. And we'll continue to pursue that in those geographies. Clearly, they are also challenging to operate in. They are very competitive. And in both of those regions, we have more competitors who are willing to take significant losses in the short term for presumed longer-term profitability, while we are obviously more focused on the short-term profitability. So they are challenging, but we're confident in delivering profitable and eventually also growing business in both of those regions. To the question on sales of strategic alternatives, like I think any public company, we're always open to consider strategic opportunities as they present themselves. And our businesses are very well known in their respective markets and in the broader ecosystem. So like any management team of a public company, if there are specific opportunities, we always evaluate and consider.

There are no further questions for the call. Thank you all for joining today. If you have any further questions, please reach out to the Investor Relations team directly.