Farfetch grows both turnover and debts
Portugal’s first unicorn registered losses of €110.1 million for the last quarter of 2019.
The British-Portuguese online luxury fashion platform reported accumulated revenues of €1Bn for 2019, which represents a 69% increase like-for-like on 2018.
Moreover, in the fourth quarter of 2019 sales had soared to US$382, for the first quarter of 2020, the company expects a 20%-22% growth in total turnover of goods online.
However, Farfetch announced on Thursday that its accumulated losses had increased by US$110 million (around €100 million losses) for the first quarter of 2019, totalling US$373,688 million accrued losses for 2019.
The situation looks even more uncertain for the platform given its success is to a large measure down to sales generated in China and the Far East whose luxury market has been hard hit by the corona virus.
The unicorn founded in 2007 by José Neves explains the worsening situation of its losses on expenses, amortisations and depreciations (losses) as well an to an increase in operational losses from US$24.6 million in 2018 to US$126.4 million.
But Farfetch CEO José Neves said that the fallout from Coved-19 had nothing to do with the company’s losses.
“In the light of the currently evolving situation concerning Coronavirus that we are naturally monitoring to guarantee the health and wellbeing of all our teams, I am satisfied to see that from a commercial point of view there has not been a material impact on our business”.
Farfetch reported a more than US$1Bn revenue in 2019, an increase of 69% like-for-like on 2018 while the gross value of its goods exceeded US$2Bn, up 52% like-for-like. For the quarter under analysis, sales grew from US$195 million to US$382 million now.
The total turnover processed by the digital platform (Gross Merchandise Value – GMV) skyrocketed 36% to a record US$629 million (€573 million) for the fourth quarter of 2019, exceeding forecasts outlined in the three previous months.
For the first quarter of 2020, the company expects growth in the region of 20-22%.
“It was a watershed year for Farfetch because we increased our digital platform almost twice as fast than the online luxury industry platforms and significantly improved our adjusted EBITDA margins and moved towards being profitable”, said the CEO.
The company’s EBITDA (Earnings before Interest, Taxes, Depreciation and Amortisation) for its e-commerce platform — adjusted — was negative US$121,376 in 2019 and in the fourth quarter the losses increased US$3.4 million (or 23%) to US$17.9 million. Share profit for the last quarter of 2019 stood at US$1.21.
Farfetch was floated on the New York stock market on 21 September 2018 at a price of US$20 per share. Today the share value stands at half that value – US$9.54.