Farfetch launched its long-anticipated $5.8bn IPO on the New York Stock Exchange today and its shares made a strong start rising to $28.51, having started at $20m.
It has emerged that the family behind iconic London boutique Browns were big winners from the float. The Burstein family sold shares, acquired as part of the deal to sell their business to Farfetch in 2015, worth $47m and retained shares worth $42m, according to The Times.
Jose Neves, who founded the online luxury platform just over a decade ago in London, is well on to his way to becoming a billionaire and his 14.7% stake means he now has an on-paper value of $850m.
Net-A-Porter.com founder Dame Natalie Massenet, who invested in Farfetch in February of last year, and became non-executive co-chairman, holds a stake worth more than $20m.
Farfetch started out as an online platform bringing together luxury fashion boutiques and now has more than 600 luxury boutiques and 375 luxury brands on its site. It has struck up a number of partnerships with major global players such as Chanel, Burberry, Harvey Nichols and just yesterday announced a partnership with luxury modest fashion website The Modist, to tap into one of fashion’s fastest growing categories.
In addition it offers a white label e-commerce platform service to brands such as Manolo Blahnik and Thom Browne and it is developing its Store of the Future omnichannel platform, for which Browns is the test bed.
There has been much talk lately about whether its IPO price was overcooked, particularly since the business posted losses of $68.4m in the six months to June 2018, but investors and industry watchers told The Industry that the business presented a good long-term investment prospect. “It’s a good business model within a growing marketplace,” said Fleur Hicks, Managing Director of onefourzero, a data analytics and digital research agency based in London.
“The return risks of minimised stock and holding outlays look to outweigh the risks associated with reliance upon 3rd party operations, such as delivery. It averages a 30% mark up and thus a 50-odd% margin on operations. Incredible for the fashion industry. Also, the growth rate – 60% this year – is impressive,” she added.
Image: Farfetch Instagram.