#Asia Rocket’s fashion stores seeing better days, but they’re still bleeding cash

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Rocket Internet in Asia

German startup factory Rocket Internet today announced financial results for its fashion ecommerce stores in the months of July, August, and September.

The online marketplaces are clubbed together in a larger entity known as the Global Fashion Group (GFG) and include brands such as Zalora, Namshi, and The Iconic.

Net revenue for GFG in the third quarter was stated to be US$265.8 million, an increase of 26.9 percent from the corresponding period last year. Gross profit recorded a similar rise, reaching a healthy US$110 million as compared to US$80 million the previous year.

Overall profitability, however, remained elusive – a persistent trend that Rocket seems to be struggling to shake off. The emerging market incubator said it lost a little over US$34 million in the three months alone.

The figure is down sharply from previous years, but with GFG suffering a steep drop in valuation, the pressure is on for the much-touted ecommerce group to prove it’s capable of breaking even.

Rocket says the additional US$340 million pumped into GFG this year, as well as the divestments in Jabong and parts of Zalora, have “substantially strengthened its financial position.”

Global Fashion Group's consolidated earnings for 2016 so far

Global Fashion Group’s consolidated earnings for 2016 so far

Individual startups

Rocket has regularly cited Namshi as a potential trump card and the online store for Middle Eastern markets had another stellar quarter.

Net revenue grew by 13.5 percent to settle at US$36.6 million, with gross profit also increasing by almost 54 percent. It continued its net profitability streak, with US$1.06 million in earnings this quarter.

It’s impossible to accurately determine Zalora’s performance as Rocket continued to merge it together with The Iconic, its store in Australia.

There were slender increases in things like net revenue and gross profit, but the two startups still bled US$15.5 million.

Earnings breakdown for Zalora & The Iconic

Earnings breakdown for Zalora & The Iconic

In September, Rocket Internet said it lost nearly US$700 million this year, blaming troubles at GFG for the abysmal performance.

Rocket Internet shares closed yesterday at US$19.75, down almost 50 percent from their initial offer price of US$39.31.

*Converted from Euro. US$1 = EUR 0.94

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