Farfetch hurt by headwinds in Q4 and 2022, but underlying trajectory stays positive
Farfetch has reported its Q4 and full-year results and — just like luxury peer Mytheresa this week — focused on the “unprecedented macro headwinds throughout 2022” and talked of the period being “solid” rather than spectacular.
Those headwinds were more than enough explanation for the fact that gross merchandise value (GMV) declined for both the quarter and the year.
So let’s look at the headline figures. GMV in the last three months of the year was $1.14 billion compared to $1.29 billion a year earlier. And for the year it fell to $4.1 billion from $4.23 billion. Q4 revenue dropped to $629 million from $665 million, but for the year it rose to $2.3 billion from $2.2 billion. Adjusted revenue fell to $545 million from $571 million in the quarter and rose to $1.99 billion from $1.92 billion in the year.
In the quarter the company made a loss after tax of $176.6 million, compared to a profit of $96.9 million a year earlier and in the year it made a profit of $344 million, sharply down from the $1.47 billion profit of the previous year.
The digital platform is the biggest part of its business and this saw quarterly GMV of $1 billion, compared to $1.14 billion in the previous period, and annual GMV of $3.5 billion compared to $3.6 billion a year earlier.
Brand platform GMV was $100 million in the quarter (down from $117 million) and $455 million in the year (down from $467 million).
On the plus side, the full-year revenue figure reached a record level and while it was up only 3% compared to a year earlier, it was actually up 12% on a currency-neutral basis. And while headline GMV fell 4% for the year, it rose 2% currency-neutral.
It was a broadly similar picture in Q4 with the revenue decrease of 5%, actually being a 2% increase currency-neutral. However, the Q4 GMV fall of 12% was also a 5% currency-neutral drop. And the brand platform GMV 15% drop also translated into a 3% decline currency-neutral.
Those figures are perhaps unsurprising given what's happened in the past year with the war in Ukraine, surging energy prices, inflation in general, and the sometimes patchy recovery from the pandemic having all disrupted consumer spending – even at the other end – globally. Some of those issues have also affected supply chains and we've heard plenty of reports from companies at all price levels saying that this has also been a factor in lower sales.
José Neves, Farfetch founder, chairman and CEO, was upbeat, referring to those aforementioned headwinds, but also highlighting how the company delivered currency-neutral growth, and captured market share on a three-year stack basis, "with GMV nearly doubling since the onset of the pandemic”.
He also said the firm “enters 2023 as a significantly more efficient business following our strategic reorganisation and cost rationalisations. Our solid start to the year gives me confidence 2023 will be a Year of Execution with growth building throughout the year as we comp the previous year’s macro headwinds and launch exciting new partners to deliver strong growth, Adjusted EBITDA and positive free cash flow”.
The company also announced that Elliot Jordan will step down by the end of 2023, after more than eight years as Chief Financial Officer.
There’s no replacement yet and Farfetch will now “initiate a search process to identify his successor”.
He’ll be staying on for the rest of this year, as mentioned, and will eventually leave a company that has grown its annual GMV from $380 million to $4.1 billion and now operates in over 190 countries and territories.
He “helped guide Farfetch through its transformation from a private company to a publicly traded company, including [its] listing on the New York Stock Exchange in September 2018”.
And Neves added: “Elliot has been a fantastic CFO, and I very much appreciate his continued commitment to the business until the end of the year. I look forward to working with Elliot to ensure a smooth transition. We are some way off from saying our ‘goodbyes’ but his legacy will be formidable finance and business services teams that are part of a company that we believe is extremely well placed to continue to lead the industry and drive profitable growth – and Elliot has been an important building block of our success.”
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