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Why Farfetch Stock Popped Today

By Steve Symington – Updated Apr 9, 2019 at 4:46PM

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The online luxury fashion leader delivered solid fourth-quarter results and an expanded partnership with

What happened

Shares of Farfetch (FTCH -7.30%) were up 19.6% as of 2:30 p.m. EDT Friday after the online luxury fashion retailer announced strong quarterly results and plans to merge its Chinese operations with's (JD -2.83%) Toplife platform. 

Regarding the former, Farfetch's fourth-quarter 2018 revenue grew 54.6% year over year, to $195.5 million, translating to a net loss of $9.9 million, or $0.03 per share. Analysts, on average, were expecting a wider loss of $0.10 per share on lower revenue of $180.3 million.

Click here for the latest earnings call transcript for Farfetch.

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So what

Farfetch's top-line growth was driven largely by a 67.9% increase in platform-services revenue, to $165.8 million, as well as a 6% increase in platform-fulfillment revenue, to $25.4 million. The company's active consumers also climbed 45% year over year, while its number of orders soared 58%.

"By all measures, 2018 was a blockbuster year for Farfetch," stated company founder, CEO, and co-chairman Jose Neves. "We continued to lead the online personal luxury goods market, growing [gross merchandise volume] 55% for the year -- more than twice as fast as the industry."

If that wasn't enough, in a separate press release yesterday, Farfetch announced an expansion of its partnership with Chinese e-commerce giant under which JD's Toplife platform will merge into Farfetch's existing China business. Farfetch also says it will receive a "Level 1" entry point on the app.

"We are delighted to build on our relationship with, and bring to market an unrivaled solution for luxury brands to succeed in the Chinese market," Mr. Neves added. "We believe our Level 1 access with 'closes the circle' and will be transformational for the luxury industry's digital landscape in China."

Now what

Looking ahead to the full year of 2019, Farfetch expects platform gross merchandise volume to increase 40%, while adjusted EBITDA margin should be in the range of negative 18% to negative 19% (compared to negative 19% in 2018) as the company continues to invest to drive top-line growth.

In the end, this was a straightforward quarterly beat from Farfetch complemented by encouraging plans to significantly expand its reach in the fast-growing China market. The stock is understandably climbing in response.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends The Motley Fool has a disclosure policy.

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