Shares of Farfetch (FTCH 20.45%) were taking a dive today after the luxury e-commerce fashion platform posted disappointing third-quarter earnings results and cut its guidance.
As of 2:54 p.m. ET, the stock was down 16.9%.
Farfetch said revenue increased 1.9% in the quarter, or 14.1% in constant currency, to $593.4 million, which was short of estimates at $596.6 million.
Gross merchandise volume (GMV), a measure of the dollar value of goods sold on the platform, was down 4.9%, or up 4.2% in constant currency, to $967.4 million.
Further down the income statement, gross margin improved 160 basis points to 44.9%, and the company reported an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $4.1 million. Its adjusted loss per share expanded from $0.14 to $0.24, which was better than the consensus at a per-share loss of $0.28.
CFO Elliot Jordan said, "Our third quarter results show Farfetch is successfully navigating an unprecedented macro environment, with constant currency GMV and revenue growth, significant gross margin and order contribution margin improvements year-on-year and the early financial benefits from our recent initiatives to rationalize our cost base, which are ongoing."
Farfetch also lowered its guidance for the year, calling for digital platform GMV, which makes up the majority of GMV, to fall 5% to 7%, and it expected an adjusted EBITDA margin of -3% to -5%.
The company was a big winner during the pandemic as shoppers around the world flocked to its online luxury platform, but growth has slowed since then as it has faced difficult comparisons from the COVID-19 lockdowns in China and macro headwinds in much of the world.
Farfetch should return to steady growth when the economy strengthens, but in the meantime the stock is likely to continue to struggle.