Rocket Internet’s Global Fashion Shrinks Losses on Cost Cuts

Rocket Internet SE-backed Global Fashion Group reported a narrower loss in the third quarter as rising sales and reduced costs brought the online clothing retailer closer to profitability.

The adjusted loss narrowed to 32.3 million euros ($34.3 million) from 54 million euros a year earlier, according to a statement from the retailer on Wednesday. Net revenue rose 16 percent on a constant-currency basis to 250 million euros even as the company faced increasing pricing pressure and "macroeconomic challenges” affecting its Dafiti, Lamoda and Namshi brands.

Global Fashion Group, which is also backed by Kinnevik AB, combines apparel e-commerce sites in markets including Asia, South America and Australia modeled after European incumbent Zalando SE.

“Margin improvements were driven by improved inventory management as well as meaningful efficiency gains and fixed-cost optimization,” the company said.

Investors are hoping the numbers are a sign of a lasting turnaround after criticizing Rocket Internet Chief Executive Officer Oliver Samwer’s ability to wring profitable growth out of startups that operate in commodity sectors in unproven markets. Rocket, which has invested in dozens of companies in areas including food delivery, furniture and fashion, has seen its stock price cut in half since it went public in October 2014 as some of its investments faltered.

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