Farfetch posts first quarter growth despite coronavirus uncertainty

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Farfetch first quarter trading update covid-19
Farfetch will not issue any guidance for the full year because of the uncertain environment caused by the pandemic
// Farfetch posts first quarter growth but reports slowdown in major markets
// It has not witnessed “any material impact to its diversified supply and logistics platform to date”
// Farfetch expects to make a loss in its adjusted EBITDA, of between £16.6m and £19.7m

Farfetch has revealed a growth in its preliminary first quarter figures but has seen a slowdown in its larger markets, particularly in Europe and the US amid the coronavirus crisis.

The online luxury goods retailer has also been facing an increase in promotional activity from some industry participants, as well as retailers “assessing production capacities for winter collections in light of some factory closures”.

Farfetch said it has not witnessed “any material impact to its diversified supply and logistics platform to date”, but added that any prolonged interruptions to operations of fulfilment centres and production studios “would have a material adverse impact on our business”.


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Despite this, Farfetch expects the online channel will be a major beneficiary of any spending that does happen.

Meanwhile, its preliminary figures for the first quarter showed a general merchandise value (GMV) growth of between 43 per cent and 46 per cent and digital platform GMV growth that comes in between 17 per cent and 19 per cent higher.

It also said its brand platform was expected to deliver GMV of around £83.1 million, in line with expectations.

However, it expects to make a loss in its adjusted EBITDA, of between $21 million (£16.6 million) and $25 million (£19.7 million), which is ahead of guidance.

The loss after tax should come in between $70 million (£55.4 million) and $125 million (£98.9 million).

A year ago, its adjusted EBITDA loss increased by $6.6 million (£5.2 million), or 27.8 per cent, to $30.2 million (£23.9 million).

Meanwhile, Farfetch said its GMV in China – where the coronavirus pandemic began – grew faster in the last two months of the quarter than it had done in the whole of last year.

Despite this, Farfetch said it would not issue any guidance for the full year because of the uncertain environment caused by the pandemic.

“Farfetch has continued to focus on executing on our strategic and financial objectives,” Farfetch founder and chief executive José Neves said.

“Much like we did during the 2008 financial crisis, Farfetch has been focused on supporting the luxury industry in navigating the rapidly changing environment to provide a platform for the industry so that it can flourish in the longer-term.

“In this spirit, we launched our Support Boutiques initiative to harness the power of our community to meaningfully help the hundreds of boutiques across our seller base, the majority of which are small businesses.

“With current retail store closures, travel restrictions, and shifting consumer preference and shopping habits, I expect to see an acceleration of this secular shift to online.

“This should also spur further online adoption by brands and retailers of our platform. We believe our preliminary first quarter 2020 results reflect the strength of our business model in a changing environment.”

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