Global Fashion Group (GFG) continued to be affected by challenging market conditions in the second quarter, as reflected in a drop in net merchandise value for all markets.

Net merchandise value in Australia-New Zealand, where the company operates The Iconic, dropped 9 per cent year over year.

Rising interest rates, elevated inflation, and GDP growth declines led to reduced discretionary spending and higher discounting to match a competitive market, the company said.

Overall, the German-headquartered company recorded a net merchandise value of $583.5 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 $376.9 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.