Farfetch, the luxury online marketplace, has been experiencing a whirlwind of activity lately, with major events such as an IPO, strategic product initiatives, technological advancements, acquisitions, and more. Amidst all the excitement, a pressing question arises: how have these various developments impacted the company’s financial performance?
According to the company’s founder and CEO, José Neves, Farfetch is currently operating at a loss, despite an uptick in customer spending. There is no definitive timeline for when the company expects to achieve profitability, but Neves remains optimistic that everything is unfolding as planned.
In its recent financial report for the first quarter, Farfetch saw a significant surge in its platform’s gross merchandise value (GMV), reaching $415 million, a 44% increase. The company has accumulated $1.53 billion in GMV over the past year. Revenue also spiked by 39% to $174 million, with platform services revenue jumping to nearly $142 million, up by 43% from the previous year.
The boost in GMV was largely driven by a 64.3% rise in active consumers, totaling 1.7 million. This growth was further fueled by an increase in the average number of orders per active consumer, total number of orders on the Farfetch Marketplace, and the addition of new clients to its white-label e-tail solution. Additionally, the acquisition of Stadium Goods contributed to the company’s overall growth.
Despite these positive results, Farfetch is still grappling with losses. In the first quarter, the company’s adjusted EBITDA loss surged by 27.8% to $30.2 million, although the adjusted EBITDA Margin saw a slight improvement. The after-tax loss also rose by 115.4% to $109.3 million, primarily due to the impact of a stronger US dollar.
Looking ahead to the second quarter, Farfetch expects to maintain its sales growth momentum, with Platform GMV predicted to increase between 40% and 42%. Although the company hopes for an improved EBITDA margin, it anticipates that it will remain in the negative.
Farfetch’s steadfast focus on expansion and innovation has been evident in its recent endeavors. These include launching an augmented retail pilot with Chanel, acquiring Stadium Goods and Toplife, and teaming up with JD.com. The company has also been diversifying its brand offerings through collaborations with prestigious names like Jil Sander, Etro, and Mulberry, while also expanding its direct supply partnerships with top brands such as Versace and Valentino.
Despite the ongoing losses, Farfetch remains confident in its growth potential within the online luxury goods market. With a bevy of new partnerships, website launches, loyalty programs, and content initiatives, the company remains optimistic about its future growth trajectory.
In conclusion, while profits may still be a distant goal for Farfetch, the company remains resolute in its expansion plans and investments to solidify its presence in the fiercely competitive online luxury market. CFO Elliot Jordan expressed satisfaction with the positive start to the year and reiterated the company’s unwavering dedication to continuous growth and development.
For more information on Farfetch’s latest financial updates and strategic initiatives, visit their official website here. To delve deeper into the luxury E-commerce industry, explore valuable insights on the sector at Business of Fashion.
