Farfetch, the luxury online platform, has seen a significant boost in its business during the second quarter (Q2), despite facing ongoing losses. The company has reported a strong market share expansion and has successfully connected with over half a million new customers. This growth can be attributed to the increased adoption of online shopping during the lockdown period, which has led to a 60% increase in the company’s traffic.

In terms of financial performance, Farfetch witnessed year-on-year growth rates of 48% in Gross Merchandise Value (GMV) and 34% in Digital Platform GMV during Q2. GMV rose to $721 million, while Digital Platform GMV reached $651 million. The company’s overall revenue for Q2 also experienced a significant jump of 74% to $365 million. Furthermore, Farfetch improved its profitability with a 44% gross profit margin and a 35% Digital Platform order contribution margin. However, despite these positive results, the company remained in a loss-making position, reporting a net loss of $436 million, which was wider than the previous year. This was primarily due to the non-cash impact of its higher share price on items held at fair value.

Nevertheless, Farfetch remains optimistic about its progress towards achieving adjusted EBITDA profitability by FY21. The company managed to narrow its adjusted EBITDA loss to $25 million from $37.5 million in Q2, with the adjusted EBITDA margin improving to -8% from close to -21%. Farfetch has been expanding its directly-owned brand operations, generating $66 million in Brand Platform Revenue during Q2. However, there were some delays in AW20 shipments as retailers focused on selling-through SS20 inventory before receiving new season products.

The acquisition of New Guards brands has proved to be successful for Farfetch, with New Guards surpassing GMV for any other single brand on the Farfetch Marketplace for the fifth consecutive quarter. Notably, Off-White continued to perform well, and Palm Angels secured a spot among the top 20 brands on the Farfetch Marketplace based on GMV.

Looking forward, Farfetch anticipates a year-on-year growth of 40% to 45% in Digital Platform GMV for the current quarter, projecting it to reach $588 million to $609 million. The Brand Platform GMV is expected to be between $90 million and $95 million, and the company forecasts an adjusted EBITDA loss ranging from $20 million to $25 million.

Apart from the financial updates, Farfetch has made additions to its board, bringing on four new members with expertise in technology, e-commerce, luxury fashion, and finance. Victor Luís, Stephanie Horton, Diane Irvine, and Gillian Tans join the board to contribute their knowledge and experience.

Overall, Farfetch has experienced strong momentum in its business during Q2, benefiting from increased online adoption and successful market share gains. Despite ongoing losses, the company is making progress towards profitability and continues to expand its brand operations. With a positive outlook for the current quarter and the addition of new board members, Farfetch is well-equipped to navigate the challenges and opportunities in the luxury online marketplace.

Useful links:
Farfetch Official Website
Business of Fashion Article on Farfetch Q2 2020 Results