What happened
Shares of Farfetch (FTCH 3.45%) fell as much as 16.8% early Thursday, then settled to trade down around 9.9% as of 3:30 p.m. EDT after the online luxury fashion retailer announced mixed first-quarter 2019 results.
On one hand, Farfetch's quarterly revenue climbed 38.6% year over year to $174.1 million, beating analysts' consensus estimates by around $3 million. On the other hand, the company's adjusted (non-GAAP) loss of $0.22 per share widened from $0.18 per share in the year-ago period and was worse than Wall Street's models for a loss closer to $0.16 per share.
IMAGE SOURCE: GETTY IMAGES.
So what
Farfetch founder, co-chairman, and CEO Jose Neves unsurprisingly focused on the company's "excellent growth," noting that platform gross merchandise volume (GMV) soared 44% (or 50% at constant currency) to $415 million, exceeding both the company's expectations (guidance called for Q1 GMV growth of 40%) and growth in the broader online personal luxury goods segment.
"Overall, we are very well positioned to continue capturing share of the significant opportunity in the online personal luxury goods market," Neves added.
Now what
For the second quarter, Farfetch expects platform GMV to climb 40% to 42% year over year. As such, Farfetch raised its outlook to call for full-year 2019 platform GMV growth of 41%, up from its initial target of 40%.
As long as Farfetch is choosing to forsake bottom-line profits in favor of investing to drive top-line growth and take market share, it shouldn't be terribly surprising that it might incur a wider-than-expected loss if its currently unprofitable sales momentum outpaces its outlook. But with shares up around 45% year to date leading into this quarterly update, it seems the market is unwilling -- at least for now -- to forgive these technically mixed results.
