Farfetch Stock Drops by a Third as Losses Mount — Retail Bum
Farfetch saw its stock plunge by nearly 35% after the company reported its first year-on-year decline in sales in the third quarter, and operational losses widened to $218 million.
The company said its gross merchandise value (GMV) fell by 5% for the third quarter and expects a 7% drop for the full year.
The luxury marketplace expects growth to return next year, partly driven by its newly formed partnerships with players such as Bergdorf Goodman, Richemont, Neiman Marcus, and Salvatore Ferragamo. These partnerships are, however, expected to result in $170 million in implementation costs.
The company anticipates its gross merchandise value (GMV) to grow by 22% to approximately $5 billion by the end of next year and reach $10 billion by 2025. Approximately $500 in GMV will come from its partnerships, with Farfetch providing the software support for eCommerce operations.
Looking ahead, the company expects its profits to improve by as much as 3% as it makes efforts to cut its operational costs by as much as $85 million.
In August this year, Farfetch acquired a 47.5% stake in Yoox Net-A-Porter (YNAP) from Richemont. The deal will see YNAP transition to Farfetch Platform Solutions and allow Farfetch to acquire a controlling stake in the future through a put-and-call mechanism.
Photo credit: Farfetch
Originally published at https://retailbum.com on December 2, 2022.