Farfetch upbeat as Q2 shows further luxury sector recovery
Farfetch is continuing its rapid expansion and in the three months to June 30 — its fiscal second quarter — the luxury fashion retailer saw most metrics heading in the right direction.
Gross merchandise value (GMV) rose as much as 40% year-on-year to hit $1 billion+ in the quarter, and when compared to the same pre-pandemic quarter in 2019, GMV was more than double.
With Farfetch’s operations being primarily online, the figure highlights how consumers have changed their habits for good since the pandemic restrictions globally forced many of them to either try online shopping for the first time or do more of it than was usual.
The company also said that its full-price sales growth of 90% drove digital platform GMV up 40% on the year and 89% compared to two years ago. Meanwhile overall revenue soared 43% compared to 2020, to reach $523 million. The gross profit margin improved by 30 bps year-on-year to 44% but the digital platform order contribution margin declined 90 bps to 34%.
Post-tax profit was $88 million after a $436 million loss a year earlier. But the latest figure included a $246 million non-cash benefit arising from the impact of the lower share price on items held at fair value and re-measurements. Meanwhile, adjusted EBITDA improved to a loss of $21 million, from a $25 million loss in Q2 2020.
It was a busy quarter in general as the Farfetch Marketplace continued to offer customers a huge selection of luxury fashion with more than 390,000 SKUs from nearly 1,400 sellers. Supply from both multi-brand retailers and e-concession partners continued to increase.
The company launched a number of exclusives and continued to roll out and enhance platform capabilities available to Farfetch Platform Solutions clients, such as live chat, improved personalisation, and re-purchase capabilities for pre-owned products, among others.
Since the end of the quarter, it has also initiated the Farfetch Connected Retail technology pilot with select retail partners, which will enable omnichannel, personalised experiences for its consumers and drive footfall to retailers' physical locations.
Among a number of other moves, it has also launched kidswear on Brownsfashion.com (in July) and as for its New Guards brands, it increased its ownership of the Palm Angels operating company to 100%, and its interest in the Palm Angels trademark to 60% last month as well.
José Neves, founder, Chairman and CEO said of the latest quarter: “I am truly impressed with the resilience of the luxury industry, which after an unprecedented period, is already back to growth with even stronger fundamentals. I am very proud that Farfetch was a close partner for both retailers and brands in this time, delivering strong growth to our sellers, and as a result doubling our GMV in the last 24 months.
“Our strong performance in second quarter 2021 reflects powerful flywheel dynamics in play at full force. Our stronger Farfetch brand is drawing marketing partnerships and even greater supply from brands to drive a 90% increase in full-price sales year-over-year from the highly valuable luxury audience we have attracted. All this boosts our progress towards becoming the global platform for luxury, as we continue to advance our initiatives in China, Farfetch Platform Solutions, Farfetch Connected Retail and our Luxury New Retail vision.”
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