“We’re on a mission to build the global luxury retail platform, not just fashion, ”Farfetch CEO Jose Neves said on Thursday during the Q3 2021 earnings call. the society. Even with lower incomes, Farfetch presented a positive growth vision for 2022.
Shares fell more than 20% to $ 35.80 per share, because Farfetch missed expected third quarter earnings. The gross value of the company’s digital platform merchandise increased 97% from 2019 and increased 23% year-over-year. Meanwhile, the group’s overall GMV covering Farfetch.com, Browns and Stadium Goods for the quarter exceeded $ 1 billion, up 28% year-on-year and more than double the numbers for the third quarter of 2019.
Farfetch notably achieved profitability in February of this year, unlike YNAP which is still operating at a loss. Talk about Richemont news, Vic Drabicky, CEO and Founder of Digital january, said: “By joining YNAP, Farfetch not only loses a competitor, it also gains bargaining power. This should boost profits and increase the potential for expansion. The risk is that YNAP has been underperforming for more than five years, and you must be wondering why. Richemont was unable to figure out [the company], more [YNAP] loses 300 million euros [$340 million] This year. Does combining them with Farfetch just set Farfetch up for disaster, or are they the savior? It seems high risk and high reward for Farfetch. “
“For brands, it’s probably a mixed bag. Brands want to see YNAP improve, and Farfetch has the potential to do so, which could lead to better results [for brands]. But on the other hand, every time you have less competition in the market, it adds pressure on pricing and distribution for brands, ”Drabicky said. “My hunch is that the change is interesting enough to keep the brands with both companies, for now. But time is running out on YNAP.
Below, Glossy has detailed the most notable elements of the report.
Richemont partnership and YNAP participation
With explosive news from Nov. 12 that Farfetch and Richemont are advancing talks to explore collaborative ventures, including taking a minority stake in competitor YNAP, third-quarter earnings were particularly strong. Discussions also focused on the potential implementation in fashion houses owned by Richemont and Yoox Net-a-Porter of Farfetch Platform Solutions. The e-commerce agency provides end-to-end and multi-channel e-commerce solutions for luxury fashion brands.
Although Neves said when calling the results that there is “noo guarantee that the agreement will be concluded successfully ”, this would be a benchmark for the luxury space. This would allow the two companies to have more bargaining power with the brands on the platform, as they would hold more market share. It would also increase the gross value of Farfetch and Richemont’s goods.
The importance of the retail platform in China is only growing
Richemont, along with Alibaba, invested $ 300 million last year in Farfetch. They also invested $ 250 million in Farfetch China, a new joint venture that serves as a Chinese market for Farfetch. During the call, Neves said: “China is a great opportunity for Farfetch. It will be the largest luxury goods market in the world. There has been a significant repatriation of consumer goods [in the quarter], which means digital channels are paramount. There are thousands of luxury customers in China in tier one and tier two cities in China, and Farfetch is one of the only luxury players in the market, which puts us in a unique position to capitalize on this market. Other luxury players include Alibaba and Douyin.
Retailer also eases factors from September
Although changes to Apple’s IDFA took effect in April 2021, the ripple effect for retailers is more evident in the third quarter. Stephanie Phair, director of customer service at Farfetch, said on the call that the retailer is broadening its marketing approach to include strategies unrelated to IDFA. It is because the the impact on online advertising platforms of Apple’s IDFA changes was felt across the fashion industry during the quarter.
She said that mobile push notifications are seeing good results in terms of conversion, as is a move towards the ramping up of the marketing funnel. She called the marketing changes “a big part of chapter two for Farfetch.” She also mentioned the importance for the company of driving client app downloads, creating luxury content with YouTube, and investing heavily in influencer marketing.