Farfetch "one step closer" to profitability as sales soar
Farfetch is "one step closer" to near-term profitability as sales in Q3 soared on the back of a "paradigm shift" to online for luxury consumers.
The London-based, New York-listed luxury platform achieved revenues up 71% year-on-year to $438m in the three months ended 30 September. Gross merchandise value hit $798m, up from $492m.
Loss After Tax was $537 million, while adjusted EBITDA improved to $(10)m from $(36)m in Q3 2019.
The figures were released days after the business confirmed a global partnership with Chinese e-commerce giant Alibaba and Swiss luxury conglomerate (and parent of YOOX NET-A-PORTER Group) Richemont.
As a result of the deal – which focuses on a Chinese joint venture and will result in Farfetch taking a presence on Alibaba's Tmall Luxury Pavilion and the Luxury Soho online outlet – the two new partners will invest $1.15bn into the business. The deal aims to exploit the shifting behaviour of Chinese consumers who are now buying luxury online rather than travelling to Europe.
José Neves, Farfetch Founder, Chairman and CEO said of the latest figures: “The Farfetch platform continued to accelerate in third quarter 2020, setting another quarterly GMV record and further indicating we are witnessing a paradigm shift in favor of online luxury. The Farfetch platform is not only capturing this opportunity but is helping drive this paradigm shift both for luxury consumers and brands.
“What we are seeing is the acceleration of the secular trend of online adoption in luxury – an industry that is still very underpenetrated. The capabilities developed across the Farfetch platform over the past 13 years in anticipation of the eventual digitization of the luxury industry uniquely position Farfetch to capture this opportunity today. And our recently announced partnership with Alibaba and Richemont further position us to seize the opportunity to bring the luxury industry into the next generation and drive sustained growth and market share for many years to come.”
Elliot Jordan, CFO of Farfetch, confirmed the 13-year-old business had profitability firmly in its sights: “I’m delighted by the results of our third quarter, reflecting strong momentum behind the Farfetch platform and an acceleration of growth on the marketplace. This strong growth in revenue, steady improvement in unit economics and further operating cost efficiencies means we are another step closer to achieving the key milestone of operational profitability in the near-term.
“The strong underlying financial profile of Farfetch and recent investments by our new strategic partners who form part of Luxury New Retail initiative means we are well placed to support the global luxury industry in navigating the continued growth in online over the coming years.”
As well as its global marketplace, which carries products from 1,200 luxury sellers, Farfetch operates the e-commerce businesses of a number of luxury labels and owns Italian luxury brands group New Guards, parent of Off-White among others, and British luxury retailer Browns.
