Farfetch revenues exceed $1bn after 69% growth
Farfetch has recorded revenues up 69% to $1.02bn in the 12 months to 31 December but, as yet, the global luxury platform has yet to turn a profit though its founder says it is "marching towards profitability".
Gross merchandise value on the platform was up 52% to $2.14bn over the year and gross profit was up from $298m in 2018 to $460m, however loss after tax was almost $364m, compared to $155.m in the prior year. Its loss at adjusted EBITDA level was $121m, compared to $96m in 2018, which resulted in an improved margin of -13.6%, versus 2018's -19%.
During the year the business diversified from its strategy of holding no stock and acting as a marketplace or technology platform for brands and retailers by acquiring Italian brand house New Guards Group, which owns Virgil Abloh's Off-White streetwear label among other names. Its white label business also launched Harrods' new global e-commerce platform.
Founder and CEO of the New York-listed, London-based business José Neves said: "2019 was a landmark year for Farfetch as we grew our digital platform almost twice as fast as the online luxury industry, and significantly improved our adjusted EBITDA margins as we marched towards profitability. With more than two million active customers and record GMV, Farfetch is firmly established as the largest global online destination for in-season luxury. At the same time, with over 500 direct brand partners on the Farfetch Marketplace and more than 20 enterprise clients for Farfetch Platform Solutions, we are the clear digital partner of choice for luxury brands.
“As we move into 2020, we remain uniquely positioned to capture the lion’s share of the $100 billion incremental opportunity in online luxury. We have continued to attract and retain an incredibly valuable and loyal luxury consumer base and captured market share.
“I am also extremely pleased with New Guards’ contribution towards our business, which, just six months from the acquisition, is delivering increased traffic to the Marketplace, enhancing our brand position and is accretive to our financials. On the enterprise side of our business, I am ecstatic to have launched Harrods global e-commerce presence on our platform."
Neves added that the company was monitoring the coronavirus outbreak carefully but at this stage there had been "no material impact" on the business. "I believe our distributed platform model, which affords us with more than $3 billion of third-party inventory across more than 50 countries, which we are able to ship to customers in 190 countries, makes the Farfetch model particularly resilient to the situation, at least in its current shape. However, circumstances regarding the novel coronavirus situation remain uncertain, and as such we are closely monitoring the situation as it evolves," he added.
Looking ahead, CFO Elliot Jordan said the business was on course for further growth, after a record Q4, and was anticipating further improvements to EBITDA margin.
“Fourth quarter 2019 was a record-setting quarter for Farfetch, where we beat our own expectations of GMV growth, order contribution margin and adjusted EBITDA. The Farfetch Marketplace continues to underpin GMV and revenue growth within our digital platform, and the brand platform is contributing meaningful revenue and profit following the successful acquisition of New Guards Group in August.
“Looking towards 2020, we are well positioned to continue to gain market share, and are forecasting strong GMV growth, with substantial adjusted EBITDA improvement targeted for the year ahead as we aim to balance our growth initiatives with continued investments in the business in driving towards profitability in 2021," Jordan said.