What happened
Shares of Farfetch (FTCH +0.00%) were soaring Friday after the online luxury fashion retailer delivered solid fourth-quarter results and gave strong guidance for 2022.
As of 1:10 p.m. ET, the stock was up 39.3%.
Image source: Farfetch.
So what
Farfetch said its overall gross merchandise volume (GMV) -- the total value of the goods sold on its platform -- increased by 22% year over year to $1.3 billion, and revenue rose 23% to $665.7 million. Revenue for the quarter actually came up short of analysts' consensus estimate of $676.9 million, but investors were willing to overlook that as profitability improved and the company faced headwinds as the global economy reopened and international travel began to pick up. As an e-commerce platform, Farfetch seemed to benefit from the travel restrictions that were previously in place as shoppers turned to it for luxury goods.
OTC: FTCH
Key Data Points
Investors were also impressed that its adjusted EBITDA jumped from $10.4 million to $36.1 million, showing it was less reliant on markdowns to drive growth. On the bottom line, it posted an adjusted loss per share of $0.03 -- which matched analysts' estimates -- compared to a year ago, when it broke even.
"Our fourth quarter results clearly demonstrate the strong momentum behind the Farfetch platform," said CEO Jose Neves in the earnings press release. "We exit the year having once again delivered market-share-capturing GMV growth in 2021 along with our first year of adjusted EBITDA profitability. This positions Farfetch for an incredible 2022 focused on continuing to lead the online luxury fashion industry, growing faster than the runner-ups, and expanding profitability."
Now what
For 2022, the company is guiding for GMV growth in the 28% to 32% range on its digital platform, an improvement over 2021 in the category that provides a majority of its revenue and gross profit. For its brand platform, it anticipates 20% to 25% GMV growth. The company also forecast that its adjusted EBITDA margin would land in the 1% to 2% range.
Farfetch is one of several pandemic winners that has experienced a share price collapse over the past year -- even after Friday's jump, it's still down more than 67% from where it traded a year ago. But that year-long decline seems to have helped fuel Friday's surge, as the market now seems to view it as a buying opportunity. Additionally, investors have to be encouraged by the expected revenue acceleration this year.
