What happened

On another bad day for retail stocks, one retailer shined brightly on Friday: Farfetch (FTCH -4.48%). The London-based online "luxury" marketplace announced Q4 and full-year 2019 earnings last night, and in a couple of respects, exceeded expectations. 

Heading into earnings, analysts had predicted Farfetch would lose $0.18 per share (pro forma) on sales of $341 million in the quarter. In fact, Farfetch said its pro forma losses were only $0.08 per share, while its sales came in at a much healthier-than-expected $382 million. 

Upward pointing arrow formed from a dollar bill

Image source: Getty Images.

So what

That's the good news. The bad news is that GAAP results were quite a bit weaker than those pro forma numbers might suggest. According to the company's earnings report filed with the SEC, Farfetch actually lost $0.34 per share GAAP -- four times the loss as calculated pro forma and more than 11 times more money lost than in the year-ago quarter.

For the full year, Farfetch's losses came to $1.21 per share -- twice what the company lost in 2018.

Gross profit margins declined in both the quarterly and annual periods, ending the year down 450 basis points at 45%.

Now what

Turning to guidance, Farfetch didn't tell investors precisely what to expect this year in terms of either revenue or earnings. Instead, it couched its predictions in terms of "gross merchandise volume" (GMV).

Management believes this year will see Farfetch pass the $3 billion mark on GMV, which would represent 40% to 45% growth in the amount of merchandise passing through its marketplace. If one were to assume a similar relationship between GMV and revenues this year as Farfetch enjoyed last year ($2 billion in GMV resulting in $1 billion in revenue), then this would appear to imply that sales could pass $1.5 billion in 2020.

That's actually slightly ahead of analyst estimates -- and quite possibly the real reason Farfetch stock jumped today.