Neves said the company redesigned the organization with a focus on efficiency, including staffing and spending discipline around marketplaces, Farfetch Platform Solutions (FPS) and platforms. -brand forms. “Farfetch’s global luxury platform is on track to more than double in size in three years, despite an unprecedented series of global events,” Neves said in a statement. “It’s really important to take a step back,” he told investors on the call. “These three years have been very volatile.”
He is optimistic about his strategic partnerships with Ferragamo, Neiman Marcus and, pending regulatory approval, Yoox Net-a-Porter (YNAP). The company was unable to provide a timeline for the latter, but noted that it is currently working with regulators in multiple jurisdictions. The slowdown follows a growth spurt in the second quarter, with sales rising 10.7%. The company expects to return to solid growth and free cash flow in 2023, as it forecasts a decline in the fourth quarter.
The loss of business related to China and Russia is evident in the decline of the market. CFO Elliot Jordan attributes the year-over-year drop in EMEA to shutdowns in Russia and the drop in Asia-Pacific to China’s Covid regulations, noting the strength of the US dollar’s impact in both regions as well. In 2021, Russia accounted for about 7% of Farfetch’s market GMV, making it a significant dropout for 2022, Jordan said. He says Farfetch will annualize the negative headwind at the end of the first quarter of next year. “Russia is a mathematical equation. We will drop it by March next year.
Excess stocks due to the Russian and Chinese situations also pose problems. Farfetch does not plan to do promotions, in order to maintain its gross margins. He therefore expects the fourth quarter to “get worse” due to excess inventory.
Chief Customer Officer Stephanie Phair cited year-over-year growth in private customers, a return to in-person events and the continued shift from wholesale to concessions and direct-to-consumer channels. consumers among luxury brands like positives, noting the recent sale of a $930,000 emerald Bulgari ring. She added that this quarter, Farfetch is rolling out a 3D viewer for handbags to its platforms.
While Farfetch supports Web3-related startups in its new class of accelerators — which is often an early look at future partners or acquisitions — a digital mode acquisition isn’t being considered at this time. The opportunity, according to Neves, currently lies in infrastructure, bitcoin price notwithstanding. “A platform needs to create building blocks for other businesses to build on.”
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