Farfetch’s First-quarter Sales Run Up 46.4 Percent
Farfetch gained more ground in the first quarter.
The luxury platform’s revenues for the three months ended March 31 increased 46.4 percent to $485.1 million from $331.4 million a year earlier. The gross merchandise value of sales on the platform grew 50 percent to $916 million.
Adjusted losses before interest, taxes, depreciation and amortization improved to $19 million from $22 million a year ago.
After-tax profits for the quarter were an accounting aberration and tallied $517 million, including a $660 million non-cash benefit from “items held at fair value and remeasurements.”
José Neves, the company’s founder, chairman and chief executive officer, said the year started off stronger than expected.
“Our brand partnerships have never been stronger, and our customer and brand building initiatives are resonating well to drive awareness of our value proposition and retention of our valuable consumers,” Neves said. “I am also very enthused by the positive consumer reaction to our recent launch on Tmall’s Luxury Pavilion, and the momentum building behind our Luxury New Retail vision as we see it being adopted by luxury partners around the world. I am more confident than ever in our position to go after the significant growth opportunities we see as a digital enabler of the global luxury industry – a nearly $300 billion opportunity which we remain laser-focused on and plan to continue investing behind to deliver significant value over the long-term.”
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Neves has become — or is going to have be — one of fashion’s premier multitaskers as he pursues his stated vision of becoming “an operating system for the industry” as well as tech partner and digital enabler.
While Farfetch’s own brands, such as Palm Angels in its New Guards Group unit, and its retail outpost Browns do hold inventory, the company is primarily a connector.
Lately, Neves has been making some pretty big connections, such as the deal to put Farfetch on Tmall, which was made possible through a mega partnership with Alibaba and Compagnie Financière Richemont (an agreement that also received some buy in from François-Henri Pinault, managing partner of Artemis, which owns another luxury giant, Kering).
Farfetch’s roots are in its platform, where it provides a digital space for boutiques to sell to customers. Now the company is offering more services, from personalized style suggestions via email for consumers to a fully connected and integrated physical store set up for merchants.
Neves and crew provide the space where commerce happens and sell features a la carte.
In tech terms, that’s a scalable business model — some new capability can be invented once and then sold many times over, producing larger and larger profits along the way at little additional cost.
While that has helped whet the appetite of Wall Street, investors seem to run hot and cold on Farfetch. The stock traded as high as $73.87 in February and closed down 4.4 percent Thursday to $37.03, giving it a market capitalization of $13.1 billion. Following the quarterly update, the shares slipped 2.8 percent in afterhours trading.
Farfetch is in some ways still developing in the old fashioned manner as well with category expansion.
Next year, it plans to launch into the beauty category with an eye toward presenting consumers with a whole look.
While many big beauty names — protective as always of their brand names and positioning — have been shy about digital platforms, some fashion brands that are fans of Farfetch might see it as a good home for their beauty products as well.
The company could also seek to build or buy other bridges to beauty. WWD reported last month that Farfetch had held talks with Cassandra Grey’s luxury beauty firm Violet Grey for a potential acquisition or partnership.
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