Farfetch dives into the red due to "unprecedented macro challenges"
Luxury fashion platform Farfetch has reported a loss after tax of $174 million (£140 million) in Q1, ending 31 March, despite reporting a revenue increase of 8% year-on-year.
Last year, the company reported a profit of $729 million (£587 million) in the first quarter. However, Farfetch has swung into the red, after tax, by $174 million (£140 million) for the same first quarter period. Before tax, revenues were up by 8% to $556 million (£448 million).
Gross merchandise value stood flat at $932 million (£750 million) and digital platform GMV fell by 1% to $800 million (£644 million).
Farfetch’s adjusted EBITDA loss was $34.7 million (£27.9 million), which was on par with last year’s loss of $35.7 million (£28.7 million).
The company was affected by "macro headwinds" including the suspension of trade in Russia and mainland China, a rise in markdown sales, the currency impact of a strong US dollar and customer demand for cheaper alternatives.
Looking forward, the company expects its "recent launches of Ferragamo and Reebok, with Neiman Marcus Group" and the progress it's making on its "profitability and cash flow initiatives" will get it back on track by the end of the fiscal year.
José Neves, Farfetch Founder, Chairman and CEO, commented: "I am delighted to report that Farfetch was back to growth in the first quarter of 2023. Our first quarter results represent the first step towards achieving our plan for 2023, our Year of Execution, and demonstrate our strong execution in the face of continued macro headwinds.
"At the same time, we continue to focus on our medium- and longer-term goals, including our mission to be the leading global platform for the more than $360 billion luxury industry. We believe we are uniquely positioned to go after this opportunity and have demonstrated a track record of strong growth over the years, having grown GMV three times as fast as the industry between 2019 and 2022.
"I am extremely confident in our ability to continue expanding our reach across this resilient luxury industry, and in our prospects of delivering sustained profitability and free cash flow over the coming years."
Last year, Farfetch's CFO of eight years, Elliot Jordon, stepped down amidst slowing revenues. The news came as the company warned of "reduced demand" for its offerings and services.