Farfetch said its latest set of results, for Q1 2020, “demonstrate the strength of the platform model within the luxury industry” as it continued to make market share gains in a quarter characterized by physical store closures. But the e-tail and brand giant remained loss-making during the period, although it said it’s “well-capitalized” and is continuing on its path for adjusted EBITDA profitability in full-year 2021.
So what happened in the first three months of its year? Q1 gross merchandise value (GMV) was up 46% year-on-year to $610.8 million; digital platform GMV was up 19% to $494.9 million, and it saw a $107 million brand platform GMV on the continued strength of its new-to-the-portfolio New Guards Group (NGG) collection of brands.
Meanwhile, revenue increased as much as 90% to $331 million, while in-store revenue surged to $8.5 million from $4.5 million. But the Q1 net loss was $79.1 million and although it said this was “relatively unchanged” year-on-year, it was actually a little higher than the prior 12 months. Adjusted EBITDA improved by $7.9 million to a loss of $22.3 million and the adjusted EBITDA margin improved radically to -7.4% from -20.7%.
That company said that while many of the brands, boutiques, and department stores that serve as its luxury sellers are temporarily offline, this hasn’t had a material impact on GMV so far. This is due to the fact that 85% of products in its main SS20 catalog were available from multiple sellers.
So how was the demand? Strong, although towards the latter part of the quarter, it saw a slowdown in growth from its larger markets in Europe and North America as lockdowns began in various countries.
While this didn’t have “a material impact on first-quarter 2020 results” and while there were “encouraging signs in the China region”, where it saw “a meaningful acceleration in the last two months of the quarter”, it also saw a deceleration in group GMV growth in the latter part of the quarter overall.
But the company has “continued to capture market share of the online luxury fashion industry” as it kept up an “exceptionally broad selection of luxury fashion” with Q1 in-season stock exceeding 300,000 SKUs from more than 3,400 brands.
Linking with Farfetch appears to have helped the retailers it works with. It said that following the February 2020 launch of Harrods.com by Farfetch Platform Solutions, it has “enabled Harrods’ global e-commerce business, including throughout the department store’s temporary closure in light of Covid-19 lockdown measures”.
Making sure it's brand and retail partners are happy is key to the business and during the quarter, it said it maintained 100% three-year retention of the top 100 direct brand and top 100 boutique partners.
Customer satisfaction matters as well of course and the company accelerated its Access loyalty program to 1.4 million enrolled customers at the end of March.
As for its New Guards acquisitions, for the fourth consecutive quarter, GMV from NGG brands, in aggregate, exceeded GMV for the single largest brand on the Farfetch Marketplace in Q1 2020.
Off-White continued to see strong demand and “in response to heightened interest from women, Palm Angels launched its first women’s ready-to-wear collection for Spring/Summer 2020”.
CEO and co-chair José Neves said of all this: “When I founded Farfetch 12 years ago, I never imagined that the global platform I was building for the luxury industry would be put to the test in such a devastating crisis. Over the past few months, as we have responded to an ever-changing environment to serve the community of creators, curators, and consumers of this industry, our teams have stretched beyond perceived limits and demonstrated the resilience of our business model.
“The investments we have made to build the global platform for the luxury fashion industry have been paying off, with features such as our global logistics capabilities, geo-diversified supply network, and localized services for a global consumer base, enabling the continuity of our operations and delivery of our strong first-quarter 2020 results.
“But one thing that has become evident over the past weeks, is that the world will not go back to the same ‘normal’ as we knew it pre-COVID-19. As we consider the structural changes that will likely impact the luxury industry, I am confident that our unique set of capabilities position Farfetch to be even stronger in the future.”