Busy Farfetch sees soaring sales even though profits are some way off
today May 16, 2019
Late 2018 and early 2019 have been ultra-busy at Farfetch with its IPO, many product initiatives, tech developments, acquisitions and more. But how has this all fed into what really matters, the company’s results?
Well, customer spend is surging but it remains loss-making and there’s no hint as to when profits will be forthcoming, although the company isn’t concerned as everything seems to be going to plan.
Late Wednesday, it said that its platform gross merchandise value (GMV) rose as much 44% to $415m in Q1 (January to March), and the growth was as much as 50% currency-neutral. It has generated $1.53bn in GMV in the past 12 months. Its own revenue meanwhile rose 39% to $174m and platform services revenue was up 43% year-on-year to almost $142m.
The increase in GMV was primarily driven by a surge of 64.3% in active consumers to 1.7m, plus increases in the average number of orders per active consumer and the total number of orders on the Farfetch Marketplace.
It was also boosted by a rise in the number of clients supported by its white-label e-tail solution for brands, by growth in transactions through these managed websites, and by the addition of Stadium Goods to its line-up.
Founder and CEO José Neves called the figures “excellent” and said they “outpaced both our expectations and, by some distance, growth in the online personal luxury goods sector as we continued to gain market share.”
But of course, as we said, the company is still loss-making. Its adjusted EBITDA loss increased by $6.6m, or 27.8%, year-on-year in Q1 to $30.2m, although the adjusted EBITDA Margin improved from -22.9% to -20.7%. Its after-tax loss ballooned 115.4% to $109.3m with the operating loss widening from $35.1m to $85.5m, hurt by the stronger US dollar.
For Q2, the company continues to expect explosive sales growth with Platform GMV to be up between 40% and 42%, and while the adjusted EBITDA margin should improve, it will remain negative at around -19% to -21%.
Profits, as with most ambitious tech-based companies, seem to be some way off and that’s hardly surprising given the heavy investment the company is making in growing the business.
Recent developments have included it launching an augmented retail pilot in Chanel's new Paris flagship boutique at 19 Rue Cambon, acquiring Stadium Goods and Toplife, and launching on JD.com's platform via those two acquisitions.
And it has worked hard on boosting the overall brand offer. Jil Sander, Etro, and Mulberry have all been added as direct brand partners and it expanded direct supply with brands such as Versace, Maison Margiela, Valentino, Phillip Plein, Zegna, and Pucci, among others.
It has also added 30 new boutique partners including category specialists in fine jewellery/watches, and kidswear, plus its first boutique partner in Puerto Rico. Additionally, it has expanded department store relationships, adding On Pedder and Joyce (part of the Lane Crawford Joyce Group).
New local websites, more white-label partners, new content initiatives and loyalty programmes, a dive into resale, and more really reflect the frenetic pace of development at the firm.
It all means that despite the losses, the company believes it’s headed in the right direction and is “very well-positioned to continue capturing share of the significant opportunity in the online personal luxury goods market.”
CFO Elliot Jordan said he was “very pleased with the strong start we have made to the year,” and called Q1 a “well-executed quarter.”
He added that the “rapid growth enables our continued investment in both nearer-term customer engagement and longer-term platform development, underpinning our continued future growth.”
Copyright © 2020 FashionNetwork.com All rights reserved.