Global Fashion Group S.A. (GFG) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Global Fashion Group's Q2 2025 Results Presentation. I'm Christoph Barchewitz, CEO of GFG, and I'm joined today by our CFO, Helen Hickman. I will start the group highlights for Q2 and then cover our regional results and key developments. Helen will then take us through the group results and our outlook. After that, we'll open up the call for Q&A. We've had a successful quarter in the first half of the year, maintaining our top line and improving our profitability, positioning GFG to deliver sustainable future growth. We continue to stabilize NMV, driven by robust double-digit growth within Latin America and strong momentum in ANZ, offset by continued top line declines in SEA. Our top line has been supported by improving customer trends across the group with continued active customer growth in ANZ in the second quarter. Churn rates have improved across all our regions and in Lat Am and ANZ, new and reactivated customers exceeded churn for the period. Gross margin expansion has continued, primarily supported by retail margin improvements as a result of inventory management and increased marketplace participation. The combination of gross margin growth and continued cost control measures have delivered significant savings, resulting in a material uptick in adjusted EBITDA margin for the quarter. We delivered a normalized free cash flow breakeven quarter and ended the period with a strong cash balance of $151 million pro forma cash. In the quarter, we delivered net merchandise value of $249 million, decreasing by 0.4% year-over-year on a constant currency basis. Continued efficiency in inventory management led to a fresher assortment, lower retail discount rates, resulting in a stronger retail margin. This, combined with a strong marketplace performance drove a 2.9 percentage point increase in gross margin to reach 47.7%. Our adjusted EBITDA margin improved by 3.9 percentage points to positive 1.8%, our highest ever Q2 margin, benefiting largely from the gross margin uplift and ongoing cost efficiency program. We ended Q2 with 7.4 million active customers, down 2.5% year-on-year, marking our fifth consecutive quarter of slowing decline assisted by the growth in our largest market, ANZ. These customers placed 4.1 million orders at an average order frequency of 2.3x. Next, we have our segment results and business updates. We remain firmly focused on executing our strategic priorities with discipline and we are making good progress across all of them. Our priorities are to provide a best-in-class customer experience being the preferred partner for brands and operating in a way that is positive for both people and the clients. With that in mind, let's review each region's performance and key achievements in advancing our strategy. You may recall, we shared this chart in our full year results back in March. It depicts the ratio of new and reactivated customers over churn customers since before the COVID period. As a result of ongoing initiatives to retain active customers, reactivate past customers and attract new customers, our overall trends continue to improve, with our customer replacement rate now close to 100%. Notably, both LATAM and ANZ increased their overall customers in the period, whilst SEA continued to fall. This has been achieved whilst maintaining marketing spend as we remain focused on attracting and reactivating high-value customers and further integrating our marketing and CRM capabilities. While the trend in SEA continues to be challenging, we are confident in our plans to reverse the decline and return the region to growth. Looking first at LATAM. Q2 performance demonstrated sustained positive momentum on the top line with a 10.2% year-on-year increase, making -- marking the fourth consecutive quarter of NMV growth in the region with both Brazil and Colombia experiencing double-digit growth. Strong retail execution delivered 1.2 percentage points of gross margin improvement year-on-year to 46.7%. In H1, Lat Am's adjusted EBITDA margin improved by 5.3 percentage points year-on-year to negative 1.9%. This improvement was primarily a result of continued actions on fixed costs and a better retail margin. The decline in active customers slowed to negative 0.3% in Q2, marking the sixth consecutive quarter of an improved trend. This was supported by better customer retention and replacement rate. Next, let's turn to some specific examples of how we have improved performance in Lat Am. We continue to improve our customer KPIs. New and reactivated customers exceeded churn, which was down in the period due to our focused marketing and commercial efforts to retain and reengage customers. During this period, we trialed a new CRM communication tool aimed at engaging target customers who downloaded our app within the past week, but have not yet signed in. This initiative focused on boosting first-order conversion rates, resulting in more than a 20% increase in conversion in both Brazil and Colombia. Our Lat Am team has achieved a 15% increase in H1 NMV across our 10 biggest brands. This success was driven by creating collaborative business plans with our largest brand partners, setting shared goals and executing targeted actions to ensure optimal stock availability in our fulfillment center. We have employed AI to produce marketing campaigns Pioneer during our Valentine's Day event in June. This hybrid approach using human creativity and AI capabilities delivered significant gains in our ability to create campaigns at speed in addition to significantly reducing production costs. Now moving on to SEA. SEA top line remains challenged due to heightened competition across markets with NMV down 22.5% in Q2 year-on-year, partially impacted by the earlier timing of Ramadan, which fell fully in Q1 in 2025. While the top line declined, gross margin advanced 4.5 percentage points, largely supported by a mix shift to marketplace and platform services and actions to manage excess aged stock. SEA continues to focus on strengthening its overall market position and a number of actions have been taken to turn around performance. These actions include a transition to a purely function-led management team structure across our 5 markets, the removal of noncore categories and long tail marketplace assortment and move towards a more focused and curated offering in our core categories and company-wide cost reductions. As a result of our strong gross margin improvements and robust cost actions, we have delivered a significant increase in adjusted EBITDA during a period of declining volumes. In Q2, we delivered a 13% reduction year-over-year in our total cost base. This was largely driven by a series of cost reduction initiatives and to a lesser degree, the volume-driven impact on our cost base, partially offset by inflation. As a result, at the end of Q2, headcount in the region was 22% lower year-on-year. As part of our plan, we have shortened our fashion and lifestyle offering by supporting our largest brand partners across retail and marketplace and focus on our core categories, apparel, footwear, accessories and sportswear. As part of this process, we are removing SKUs in nonessential categories and the long tail. The turnaround in SEA is well underway and I am pleased to share the appointment of our new CEO for the region. Felipe Garcia Alvarez brings over 20 years of experience in fashion and consumer industries, having helped fashion e-commerce leadership roles at several major e-commerce organizations. We are confident that his expertise, leadership and vision, will be instrumental as we drive our strategic plan to position the business for long-term success. We remain committed to improving SEA's performance and continue to look for opportunities to drive efficiencies whilst improving the customer proposition in the region. With our proven track record of successfully transforming our Lat Am business, we are confident in our ability to deliver improved results and achieve profitable growth in SEA. Now, looking at ANZ. In ANZ, Q2 NMV increased 5.8% year-over-year, driven by high participation in the Vogue and Mother's Day campaigns, enhanced delivery offerings in key cities and the growing strength of our overall platform proposition. Growth in higher-margin categories and the optimization of our aged stock resulted in retail margin improvements have contributed to a 3.5 percentage point increase in overall gross margin, reaching 48% in both the quarter and the first half. In addition to a gross margin improvement, our continued cost efficiency program drove year-on-year strengthening in our adjusted EBITDA margin, with a 3.7 percentage point increase to 3.2% margin for the first half. Another key highlight in the region has been the 4.3% increase in active customers in Q2. This reflects the strong appeal of the ICONIC's unrivaled retail and marketplace brand portfolio and our ongoing operational improvements. The continued success of the Got You Looking master brand campaign has also boosted its momentum by increasing customer engagement and awareness. In ANZ, we are continuing to deliver operational improvements. Building on the success of our OWMS implementation, we have expanded delivery capabilities across key urban centers, including reducing delivery time for free standard delivery in Melbourne to 1 to 2 days, positioning the ICONIC as one of the fastest e-commerce retailers delivering to Melbourne. We have expanded our parcel locker capabilities now offering customers an express delivery option. Our order shift to parcel lockers have grown by 40% year-on-year, demonstrating the strong customer demand for flexible and faster delivery solutions. The region has delivered some excellent campaigns in collaboration with some of our largest brands. Highlights include our outrun your delivery collaboration with Nike and Speedo's Run & Plunge campaign, both of which have driven increased customer engagement with the ICONIC and our partner brands. For example, the Nike campaign attracted over 1,000 observers and participants, generating nearly 0.5 million organic social impressions. We are differentiating ourselves in the ANZ market by becoming an enabler to the fashion industry. Leveraging our scale, fashion credentials and marketplace platform services. Our Fulfilled By capabilities are making a big difference for New Balance, we moved their highest volume SKUs to fulfill by the ICONIC in March to accelerate the growth with the rest of the range utilizing drop ship. This allows the ICONIC customer to receive all purchases of items from our warehouse in 1 parcel in a time frame that suits them. As a result, New Balance experienced a 26% increase in conversion on the FBI assortment. Returns are also simplified. Products come directly back to the ICONIC and we're able to get them back on the shelf quickly, reducing costs for the brand. Typically, about half of these return products are sold within a week. The New Balance story is a great example of how our platform strategy is strengthening our leading market position and resulting in a continued increase in marketplace share during the period. GFG continues to advance its platform strategy with marketplace comprising 40% of NMV in H1 '25, and up 1.1 percentage points year-on-year. While the present increase is only moderate, we are still making progress as new brand partners are onboarded and set to scale with our suite of services. Our target remains to increase this to around 45% whilst ensuring we optimize our customer experience and deliver value to our brand partners. Our share of items Fulfilled By GFG and cross-docking has increased by 2.2 percentage points to 38% of marketplace items shipped. Fulfilled By GFG delivers an enhanced customer experience, add scale to our fulfillment operations while also contributing incremental gross margin to GFG. Platform Services represent 3% of revenue. We continue to advance offerings in this space to grow this revenue stream towards the 5% target. I'll now hand it over to Helen for the group results and outlook.

Thank you, Christoph. Now let's move on to our group KPIs. The rate of active customer decline has continued to slow with a 2.5% year-on-year decrease in Q2. As mentioned previously, we're seeing stronger customer trends in both ANZ and Lat Am with new and reactivated customers exceeding churn in the quarter. Order frequency remained stable compared to quarter 1 at 2.3x that declined marginally versus last year. Before going into the detail of our financial metrics, I'd like to take a moment to explain the impact of recent FX movements on our financial KPIs. For the first half of the year, we've experienced FX devaluation in our key markets, notably a 13% devaluation in the Brazilian real and a 5% devaluation in the Australian dollar against the euro. As a result, our reported NMV has been negatively impacted by EUR 30 million in Half 1 and our adjusted EBITDA to a lesser extent EUR 0.4 million. To mitigate the impact of FX and highlight the operational performance of our business or growth rates presented are on an FX-neutral basis. In the second quarter, NAV was relatively stable with a small 0.4% decline with Marketplace share of group NMV increasing to 39%. In Half 1, we saw NMV growth on a constant currency basis of 0.4% year-on-year to EUR 476 million, the first Half 1 growth, we have delivered since 2022. During both quarter 2 and Half 1, orders declined by 2.1%, mainly due to reduced traffic. However, this was partially offset by improved conversion rates. Notably, the rate of order decline has continued to slow from a 16% decline experienced during Half 1 last year. Average order value grew 1.8% year-on-year in Q2 on a constant currency basis, largely driven by price inflation and a favorable category mix shift. Due to the devaluation of the Brazilian real and the Australian dollar against the euro, our AOV is down in absolute year returns versus the prior period. Now looking at revenue and margins. In Q2, whilst revenue declined 1.2% on a constant currency basis and 0.3% in the first half, gross margin increased 2.9 percentage points year-on-year to 47.7% in quarter 2. This improvement was driven by retail margin expansion to a healthier inventory profile with reduced discounting and lower age stock levels, along with an increased share of marketplace and platform services. Adjusted EBITDA margin also had a significant uplift improving by 3.9 percentage points year-on-year to reach 1.8%, our first positive second quarter on a like-for-like basis. This development is the result of our continued focus on enhancing gross margin and disciplined cost management across the group. As we move forward, we remain focused on maintaining these improvements and delivering further progress towards our goal of achieving sustainable profitability. Moving on to costs. Our commitment to continued cost efficiency resulted in a EUR 26 million cost reduction year-over-year in Half 1 '25. This is a 7.8% decrease on a constant currency basis. The majority of the reduction was due to cost and efficiency initiatives. The OWMS integration in ANZ is delivering significant operational benefits. Additionally, further cost reductions were achieved through targeted actions, primarily from headcount reductions, relocating headcount to lower-cost regions and marketing efficiencies. Regional FX devaluations contributed to approximately 1/3 of the absolute cost base reduction. These efficiencies have helped offset top line pressures and improved our overall profitability, whilst allowing us to continue to invest in projects that support our long-term growth. We continue to maintain a healthy inventory provision with a key focus on reducing aged stock. The proportion of aged inventory, that being stock held for more than 180 days improved to 15% compared to 20% a year ago. As we return to top line growth, we'll start to invest further into inventory to support the increased sales. We remain committed to manage this in an efficient way by carefully monitoring sell-through rates and inventory days cover. Thanks to our efforts to improve our inventory management, we successfully reduced our inventory days to a healthy level over the last 3 years. I'd now like to turn our focus on to cash. In the quarter, we broke even on normalized free cash flow. Whilst this was a similar performance to happen last year, the composition was different. In Q2 '25, the cash flow was driven by adjusted EBITDA profitability of EUR 3 million rather than significant one-off working capital gains, which we saw last year. This makes our cash delivery more robust and sustainable going forward. Our level of leases remained broadly flat year-on-year at EUR 4 million. Whilst lower than last year, we delivered further working capital gains of EUR 6 million in the period. Our total CapEx reduced significantly to EUR 3 million in the quarter, down year-on-year as we annualize the elevated CapEx investment in '24 driven by the OWMS project. Our 2025 investment is mainly focused on internal technology development. In the first half of the year, our normalized free cash flow was a EUR 62 million outflow. We closed the quarter with a strong liquidity position with EUR 151 million of pro forma cash and EUR 97 million of net pro forma cash as at the end of June. Our net pro forma cash position, which excludes our outstanding convertible bond liability and other smaller loans, has remained broadly flat since quarter 1. This follows a EUR 7 million discounting bond repurchase during the quarter. We now have EUR 47.6 million of convertible bond liability outstanding and have canceled EUR 257 million of the repurchase bonds. We remain open to opportunities for further buybacks whilst considering our overall cash needs. Before we open the floor to questions, I'd like to reconfirm our full year guidance for 2025 as outlined in March. We have made strong progress in the first half of the year with positive customer and top line trends, continued gross margin progression and incremental cost savings driving further adjusted EBITDA improvements. It's important to note that the second half of 2025 laps ANZ and Lat Am's improving performance in 2024, creating tougher comparatives. The second half historically accounts for more than 50% of NMV in the year. And while there remains some volatility and uncertainty, we remain confident in our guidance for full year NMV year-on-year growth of between negative 5% and positive 5% on a constant currency basis. We expect to see year-on-year adjusted EBITDA improvements in Half 2, carrying on the momentum that we've seen in Half 1. This puts us on track to deliver our full year guidance of adjusted EBITDA breakeven to 2025. Our direction on leases and working capital inflow has not changed since the start of the year. We're revising our CapEx indication from circa EUR 20 million to circa EUR 15 million primarily due to the timing of our regional investments. The combination of these factors sets us up well to reach our longer-term ambition of achieving positive normalized free cash flow. We'll now open the call to your questions. If you'd like to submit a written question, please click on the speech bubble at the bottom of the screen.

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

I have a number of questions, so I'll ask them one by one. So starting with the time line for Southeast Asia turn around. It's great to see Lat Am and ANZ improving further. Just wondering sort of when we might expect Southeast Asia to turnaround? Is this a kind of multiyear project? And then sort of related to that, as you're cutting the long tail of brands, as you mentioned in the presentation, do you think that will impact sales trends? So we're still likely to see a decline, but could be accompanied by improving profits?

Thanks, Anne. I'll take that one. So I would say we're probably somewhere in the first quarter or 1/3 of the overall turnaround. And it's obviously very hard to predict in terms of when do we see what you're probably looking for, which is positive NMV trend or return to growth, which is ultimately obviously very much our objective. In this initial phase, we are very much focused on laying the foundations for that, resetting the cost base, which we've largely done and also making sure that any revenue or NMV streams that are noncore or not profitable are basically removed, which does have a negative impact on the top line. It is not very sizable. So you shouldn't think about this as most of this decline is driven by things in terms of categories or assortment or markets that we are no longer focusing on, but it is a contributor to this, and it's probably going to take us until Q2 or so next year to fully lap that. So that, I think, is important to keep in mind. We do think that we are on a path for consistent improvement in profitability and gross margin overall over the next couple of quarters. And then the more tricky question is how can we go from the minus 18% in the first half, and I think you're aware of the Raya Ramadan calendar shifting from Q2 to Q1. So I think you shouldn't read too much into the Q1, Q2 sequential pretty similar high single digit ultimately, if you normalize for that for the full first half. But our objective is certainly to bring the level of decline down gradually over the next few quarters and then eventually move into positive territory. But we will do this with a very strong focus on profitability and a very disciplined approach around both inventory. So rather be on the low end of intake and very conservative around this and a very conservative approach to marketing spend as long as we're not seeing the customer flywheel move in the right direction, we are not going to prop up NMV with unhealthy marketing spend. So I hope that's helpful in addressing this one.

That's very helpful. And moving on to the Fulfilled By proposition. Thank you for those extra details in the presentation. Could you talk a little bit about differences in Fulfilled By between the regions? And to what extent you can transfer the success in Fulfilled By at the ICONIC into Lat Am and Southeast Asia?

Yes, sure. So we -- actually, Australia has been the last market to launch Fulfilled By. So we are now having Fulfilled By services in all of our core markets, our major countries, life of Brazil, Australia and also across Southeast Asia. It is basically the same business model everywhere and works very, very similarly. What we're also doing, and I think New Balance is a good example for that is looking at hybrid approaches where part of the assortment is sitting in the Fulfilled By, another part may come from drop shipment or in some cases, we also have brands where part of the assortment is sitting in the retail business, and then we're complementing that with either size refills. So if it's out of stock in the size in retail, it gets replenished from marketplace or the longer tail of the assortment that we don't want to buy in retail sits on the marketplace. So we're really mixing this to optimize ultimately availability, stock efficiency for both the brand partner and for us. The one call out where there is a difference is that in Southeast Asia, we also operate the Fulfilled By services for sales on brand.com as well as on other platforms. And so we really offer what we call a single stock solution of all inventory for the online channel sitting in one warehouse managed by us. And H&M is a good example as one of our partners in Southeast Asia who are operating in this model with us across most of the markets there.

Great. And then just thinking back to one of the comments you made in the last quarter that you might rely a little bit more on marketplace to meet any sort of additional customer demand and be a little bit more conservative on inventory within retail. Are you still sort of continuing on that trend? And do you think that's an ongoing trend to continue reducing your core inventories within retail, relying a bit more on marketplace?

It's Helen here. Overall, you have seen a constant gradual increase in our marketplace share to all NMV. And as Christoph mentioned in his presentation, whilst in the quarter, we're at 39%, our overall target model is closer to 45%. So based on that, we are looking at how we will increase our marketplace share. But obviously, we need to make sure that, that is done in alignment with the assortment that our customers want and also how it works best also for our brand partners. So as we return out to a period of decline into growth, we will then obviously also want to start investing but cautiously a little bit more back into inventory to be able to support that retail growth. So very much a blend, and we're not stepping away from that sort of NMV participation increasing slightly to closer to 45%.

And then perhaps you could talk a little bit about how the trend was through Q2. I think April was perhaps a bit softer than Q1. You mentioned the shift of Ramadan as well. But if you could comment a bit on the exit rate, please, and maybe current trading, if you're able to.

Yes, definitely. I mean, obviously, there's always differences within months and also within months within regions, depending on some of the seasonality. So we have Valentine's Day in the summer or in our summer in Brazil as an example, but that's not the case across our other regions. So overall, I think -- and especially then you mentioned sort of current trade, we're broadly seeing a similar trend across current trend versus that, that we've reported. So the inter-month volatility isn't significant or concerning. So the sort of trend around growth in our 2 largest markets and then obviously, still the double-digit decline that we've been seeing in SEA is currently still prevailing.

Great. On the subject of tariffs, could you talk a bit about the developments you've seen across consumers, your competitors and suppliers, any shifts there? For example, are you seeing lower consumer confidence due to tariffs or increased competition in the market or better or worse terms from suppliers? Anything to comment on, please?

Yes. Thanks, Anne. We've obviously been following this very closely. I think it's quite hard to tell what the actual impact is in our markets. We haven't seen any dramatic impact on the supply side, which initially was our concern. And there's obviously continuous news flow about this and changes all the time. Certainly, Brazil with some of the headlines there, it is definitely not a confidence boost to the economy there. However, I think I would more describe it more broadly as a sentiment of broader concern about what's happening in the world, tariff being one aspect of that, but just the other geopolitics headline, conflicts, political instability, all those types of things in addition to consumers certainly not feeling great around some of the interest rate environments and inflation, et cetera. So I would say tariffs probably doesn't make it to the very top of the consumer minds in most of our -- or in our markets. It's more a broader sense of -- this is definitely not a period of very positive and strong, but it's more shades of negative, I would say, from a consumer sentiment that we've now had for quite some time.

That's helpful. And in Australia and New Zealand, where you seem to be taking market share and had very strong NMV growth of 5.8%. Do you have a sense of the online apparel background market growth in this region, just for the context?

Yes. We think we're probably a little bit ahead of the overall market, but not that much. We think it is -- the market growth is somewhere in the low to mid-single digits as well. So we definitely have the aspiration to be taking share and especially to do that in the mid- to higher premium segment of the market. There's obviously a very big value or high-volume unbranded segment in the market as well that has seen a lot of volatility, especially from the cross-border online players in Australia, but we're obviously quite a bit away from that with our price positioning. And in that market -- in that segment, we don't really follow that, that much in terms of the trends there. But in our segment, we think we're positioned well and probably taking a bit of share.

Okay. And you alluded that to maybe -- she and Tim. What have you seen from them in terms of marketing in your territories? Any big changes?

We have seen from them as well as TikTok Shop who are in some markets, more recent entrants than the other 2, continued very intense competition, also the general merchandise platforms, Mercado Libre in Lat Am, Shopee continue to compete very aggressively. I think the main area where we see an impact because ultimately, the proposition towards the customer, the types of customer we're going after, et cetera, is quite distinct, where we do see a bit of impact is where there is overlapping assortment with some of these platforms, which is obviously less so with a Temu or Xin, more so with the general merchandisers. What they often do is they subsidize that very strongly and basically give no commissions or even basically negative commissions. And that has an impact in our price competitiveness. And so we follow that sometimes, but not all the time depending on the specific situation with what brand it is, what product it is.

Okay. Moving on to the gross margin, please, and profitability. I wonder if you could split out the main drivers of gross margin increase in terms of sort of quantifying the impacts there that you touched on. And also perhaps talk a little bit about the outlook and whether aged stock, for example, aged stock reduction continue to drive market share -- sorry, gross margin increase.

Yes, Anne, definitely. So we sort of take the quarter 2 gross margin uplift of 2.9%. I think of it in sort of the 2 main buckets. So retail margins are probably driving about half of that improvement. So as a result of things like, as you say, our aged inventory, but also a better focus on the quality and the timeliness of our assortment. The increase in platform services and marketplace participation is then driving the majority of the rest of that increase. Going forward, we continue to improve or we continue to focus on improving our gross margins. I would say, probably at a slightly more moderated level than we've seen in the first half of this year. We've continued to do work around aged inventory. We've continued to do work around the quality of our assortment, but as we start to sort of lap some of those more significant activities that we've done, I'd expect to see improvements but more moderated into the second half.

That's really helpful. On marketing, I was very interested about what you said regarding AI-driven marketing in your presentation and how that can reduce costs. Could you talk a little bit more about that and how it works and also the outlook for perhaps marketing cost to sales given the use of this AI in marketing?

Yes. It's a very exciting development for sure. There's huge opportunities, but there's also obviously some risks around this as customer behavior shift, discovery moves maybe away from search engine into ChatGPT and the likes and all that. The specific example we used here in the presentation was very much around the imagery and the marketing campaign creation, which for us is a huge part of the business. Obviously, that always comes with a cost in terms of preparation, photography, video editing, design, et cetera. The more we can do that with AI in terms of actually creating the imagery, but also automating a lot of the process flows around this, it has 2 effects. It just drives the cost on a per campaign basis down. And then at the same time, because of that cost going down, we can do smaller campaigns and more targeted campaigns. So if you think about it, we may have only done 2, 3 campaigns for a big sales event in the past. We could now do 20 and probably overall still at a lower cost of production to all of that and without building up a huge organization around it. And so I think what it does, it helps us to become more segmented in how we speak to different parts of our customer base, and thereby increase the relevancy. So instead of trying to a campaign that tries to speak to 1/3 or half of all of our customer base, we may have campaigns that is really only aiming at 10% or 20% or even less of our customer base. So this is one aspect where automation and AI and the capabilities around that can really change it. I think where we are also seeing a lot of opportunities is just in the automation and AI use around all of our marketing channels, CRM in particular, but also when it comes to how we think about, which products we're using for performance marketing and really all the learning behind and the optimization behind that, where obviously, there is a long history of a marketing tech stack that is trying to do many of those things, but I think the incremental capabilities, some of which we've started deploying well ahead of the general public looking at generative AI more from the side of machine learning and all those types of things, but there's a lot here. Another area I would highlight is certainly product description and those types of things and also on the search side, where our search is becoming a lot smarter. I'll give you one example. If you type in a brand that we do not carry, we can now, because we're using external data, basically understand what that brand is in terms of the types of product and give the customer similar products to that brand. And that's just using potentially whatever the website or the web shop of that brand that we do not carry to then find similar product. And I think that's very exciting for the customer when you may have a certain product in mind, you think you were looking for this brand, but you then receive recommendations of similar products. So in this broader discovery marketing area, there's a huge amount of opportunities. Many things that we're doing are experimental, they're early stage, and we're learning as we go, but we feel very well positioned to be in the top quartile of players in this space.

Brilliant. Really interesting. Could we move on to operating cost savings? And you're still achieving these in Q2. But I'm just wondering how we should factor those in into the second half and maybe beyond into 2026? Or should we be relying more perhaps on top line growth and leverage for margin improvement?

We've still got a program of cost efficiencies and cost savings. So we're definitely focused on our cost base so for the balance of the year and actually ongoing, it's now perhaps a little bit more embedded in our DNA in the way in which we're really challenging all costs and efficiencies. So I would expect continued savings into the second half. And some of that will be through sort of just natural initiatives that example, sort of headcount reductions that we've done in the first half. Obviously, we'll then see that continue into the second half. Also where we've got efficiencies, things like sort of fulfillment efficiencies through things like OWMS, our second half is a much higher volume half. So as a result, actually, we'll be getting proportionately high efficiencies coming through there. So definitely think about a continued focus around cost. And as we've mentioned, our top line, there is volatility out there. So we very much really want to be able to protect the top line volatility by focusing on efficient and well-managed costs.