What happened
Shares of Farfetch Limited (FTCH +0.00%) were down 40.5% as of 12:35 p.m. ET Friday, according to data provided by S&P Global Market Intelligence, after the luxury fashion and beauty products retailer posted mixed second-quarter results and discouraging forward guidance.
OTC: FTCH
Key Data Points
So what
Farfetch's quarterly revenue declined 1.3% year over year to $572.1 million, falling far short of estimates for revenue closer to $650 million. On the bottom line, that translated to an adjusted net loss of $0.21 per share, roughly flat compared to the same year-ago period and slightly exceeding estimates for a wider loss of $0.23 per share -- though it's worth noting the loss might have been in line with estimates had it met revenue expectations considering Farfetch has yet to achieve sustained, profitable growth.
Underlying those headline numbers, Farfetch's gross merchandise value (GMV) climbed 1.2% (to $1.03 billion), as declines from the Brand Platform segment were offset by growth in its Digital Platform business; Digital Platform GMV was up 7% to $944.3 million, while Digital Platform Services revenue rose 10% to $391.3 million. Active customers also increased 7% to 4.1 million.
Founder and CEO José Neves noted the company is becoming more efficient, and has "taken decisive action to adapt to the macro environment of the last 18 months in 2023."
Now what
However, Farfetch's revised forward guidance left much to be desired. For the full year 2023, the company now expects revenue of $2.5 billion (well below estimates for $2.8 billion), and Group GMV of $4.4 billion -- the latter up from $4.1 billion in 2022 but also a significant reduction from previous guidance for Group GMV of $4.9 billion. Within that total, Farfetch is assuming Digital Platform GMV of $3.85 billion (down from prior guidance of $4.2 billion), and Brand Platform GMV of $0.45 billion (down from $0.6 billion before).
Farfetch also lowered its outlook for 2023 adjusted EBITDA margin to be around 1%, near the bottom end of its previous guidance for a range of 1% to 3%.
In the end, with shares up modestly year to date leading into this report, it's no surprise to see investors fleeing for the exits given Farfetch's huge revenue miss and significant guidance reduction.
