Farfetch has provided a business update in light of the evolving COVID-19 global health pandemic, and reported preliminary financial results for the first quarter ended March 31, 2020.
José Neves, Farfetch Founder, CEO and Co-Chair said: “Our top priority has been protecting the health and well-being of our employees, partners and customers. At the same time, we have continued to focus on executing on our strategic and financial objectives. 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 SupportBoutiques 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.
”Digital transactions are expected to represent a significantly larger proportion of the overall industry. 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, which provides the industry with the broadest reach of luxury customers and full control of the direct to consumer offering. We believe our preliminary first quarter 2020 results reflect the strength of our business model in a changing environment.”
The Farfetch marketplace connects customers in over 190 countries with items from more than 50 countries and over 1,200 brands, boutiques and department stores. Its logistics platform enables these sellers to transact with 2.1 million active consumers. Its model means that it has not seen any material impact to operations or supply chain since the initial outbreak of COVID-19.
First quarter 2020 adjusted EBITDA is expected to be $(21) million to $(25) million, ahead of guidance, and a year-over-year improvement. The business does, however, concede that current market data is not sufficient to indicate how consumers, competitors and producers might behave in the short-term, during a prolonged lockdown or as 2020 continues to evolve.
It says it has observed a slowdown in growth from its larger markets in Europe and North America. This was not unexpected as various countries continued to implement lockdown policies.
We believe the secular trends will drive an acceleration of sales to online channels, and a return to normalized levels of consumer activity in 2021. This scenario would support our ability to deliver profitability at the Adjusted EBITDA level for 2021 as planned.
This data has been prepared by, and is the responsibility of, Farfetch management. Our independent registered public accounting firm has not audited, reviewed, compiled, or performed any procedures with respect to the preliminary financial results. Accordingly, it does not express an opinion or any other form of assurance with respect thereto.
In light of the uncertainty surrounding the evolving COVID-19 global health pandemic situation, the Company is suspending its previously issued guidance for full year 2020 at this time, but remains focused on its path to profitability and continues to target Adjusted EBITDA profitability for the full year 2021.
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