Farfetch to close operations centre this month
Farfetch, the former Portuguese online luxury retail unicorn bought out by South Korea’s Coupang, is to wind up its operations centre in Matosinhos at the end of this month.
The company had already closed its offices in Braga and Avenida da Boavista in Porto, and now will close its Creative Operations Centre (CrOps) at Leça do Balio in Matosinhos according to the online news site ECO.
However, the company originally founded by José Neves in 2017, will keep an office in Matosinhos, near Porto, open.
Existing staff, who have not already been made redundant, will be transferred to Guimarães. The company also has offices in Lisbon.
A cloud also hangs over the construction of a mega-development in the region announced in 2021 that the company was due to complete in 2026.
Some 40% of the project was to have been occupied by Farfetch with the creation of 7,000 new jobs, providing a boost to Matosinhos, a largely industrial area near Porto.
The first inkling that Farfetch had been experiencing serious financial problems was on November 29, 2023 when the company decided not to publish its quarterly results.
This sent the company’s shares on the New York Stock market tumbling by 61%. Over the previous 12 months shares had tanked by 83%.
The crash was in response to key investors who no longer wanted to plough money into the company because it was making losses, and concerns were raised about its debt levels and the viability of its business model when many designers were tightening control over distribution. The company was also hit by a global slowdown in luxury goods spending as the super-rich tightened their belts after the pandemic.
In 2018, when the company floated on the NYSE, shares had soared by more than 50% on the first day of trading, giving the company a US$6.2Bn value.
After a high in 2021, when shares were trading for as much as US$70 with the company worth US$24Bn, by the end of last year a total of 97% was wiped off shares and the value of the company nose-dived to US220 million according to the FT.
The other problem was that staff numbers had ballooned to 6,000 during the company’s peak in 2022, even though bankers and analysts warned that the head count was too high, Farfetch didn’t cut back.
Now, with the acquisition by Coupang, which was completed in February, the new owners began to restructure the company leading to 30% of its workforce – 2,000 employees — being shown the door.
