Luxury fashion e-commerce giant Farfetch revealed its Q1 results, which showed positive strides towards profitability despite facing certain challenges. The company reported an 8% year-on-year increase in Q1 revenue, amounting to $556.4 million. However, when considering stable exchange rates, this growth would have been 12%. The Gross Merchandise Value (GMV) experienced a modest rise of 0.1% to $931.7 million, but it would have been a 4% increase with stable exchange rates.

While the Digital Platform GMV saw a 1% decline, it actually increased by 2% when factoring in constant currency rates, reaching $799.7 million. The decrease in the Digital Platform GMV was attributed to higher markdown sales, currency exchange challenges, and a shift in consumer demand towards more affordable products. This shift also contributed to a drop in average order value from $632 to $566, impacting overall performance.

Farfetch’s Q1 results were affected by difficulties in the Russian and Chinese markets. Trade suspension in Russia and the ongoing impact of Covid restrictions on demand in mainland China had a negative effect. However, growth in other markets helped offset these setbacks. The Brand Platform GMV rose by 10% (or 15% with constant currency rates) to $109.7 million, and in-store GMV increased by 3.8% to $22.3 million.

Despite a decrease in gross profit margin and an adjusted EBITDA loss of nearly $35 million, Farfetch’s Q1 results surpassed analysts’ expectations. The company’s stock experienced a significant surge in late trading following the release of the results.

Founder, chairman, and CEO José Neves expressed his satisfaction with Farfetch’s return to growth in the first quarter and the progress made towards achieving the company’s 2023 plan. He highlighted the strengthening GMV growth in the US and China, as well as increased orders on the Farfetch Marketplace, as signs of the resilience and strength of the core business. Neves also emphasized recent partnerships with luxury brands Ferragamo and Reebok, as well as advancements in profitability and cash flow initiatives, demonstrating Farfetch’s commitment to its 2023 plan.

CFO Elliot Jordan echoed Neves’ positive sentiments, expressing his contentment with the numbers. Jordan emphasized Farfetch’s accelerated underlying growth, disciplined cost control, and improved cash flows. He expressed confidence in the company’s ability to achieve luxury market-beating growth, profitability, and positive free cash flow, even amidst challenging macro conditions.

During Q1, Farfetch implemented various growth strategies, such as increasing supply from multi-brand retailers and e-concession partners, launching Ferragamo’s European e-commerce channel, and expanding its collaboration with Harrods. The company also prioritized the development of digital and artificial intelligence capabilities to enhance personalization and engagement on the Farfetch Marketplace, resulting in an increase in active customers to approximately 4 million.

Looking ahead, Farfetch anticipates a full-year group GMV of roughly $4.9 billion, Digital Platform GMV of around $4.2 billion, Brand Platform GMV of $0.6 billion, and an adjusted EBITDA margin of 1% to 3%. With ongoing progress and a focus on executing its strategic plans, Farfetch remains optimistic about its future in the luxury fashion e-commerce market.

For more information, visit:
Farfetch Official Website
Business of Fashion