Farfetch Limited, for its first quarter reported gross merchandise value (GMV) increase of 191.6 million dollars to 610.9 million dollars, growth of 45.7 percent. The company said in a statement that digital platform GMV increased by 80.2 million dollars to 494.9 million dollars, an increase of 19.3 percent. The company added that excluding the impact of changes in foreign exchange rates, digital platform GMV would have increased by approximately 20.1 percent. Revenue increased by 157.3 million dollars to 331.4 million dollars, representing growth of 90.4 percent. The increase, Farfetch said, was primarily driven by 30.6 percent growth in digital platform services revenue to 185.2 million dollars and the addition of brand platform revenue from New Guards. In-Store Revenue increased by 87.7 percent to 8.5 million dollars due to the addition of revenue from New Guards, as well as growth in Browns and Stadium Goods directly-operated stores, despite COVID-19-related store closures toward the end of the quarter.
Commenting on the first quarter update, José Neves, Farfetch Founder, CEO and Co-Chair said: “The investments we have made to build the global platform for the luxury fashion industry have been paying off, with features such as our global logistics capabilities, geo-diversified supply network, and localized services for a global consumer base, enabling the continuity of our operations and delivery of our strong first quarter 2020 results. But one thing that has become evident over the past weeks, is that the world will not go back to the same ‘normal’ as we knew it pre-Covid-19. As we consider the structural changes that will likely impact the luxury industry, I am confident that our unique set of capabilities position Farfetch to be even stronger in the future.”
Review of Farfetch’s Q1 performance
The increase in GMV reflects the growth in digital platform GMV and the addition of 107.5 million dollars of brand platform GMV from New Guards, acquired in August 2019.
The increase in digital platform GMV was primarily driven by growth in active consumers to 2.1 million in first quarter, increased supply available from over 1,200 partners, and the addition of direct-to-consumer brand sales from New Guards, partially offset by a decrease in the blended marketplace and Stadium Goods average order values across the digital platform.
During first quarter 2020, the company also saw a year-over-year growth in transactions through its managed websites supported by Farfetch platform solutions, driven by the launch of the Harrods e-commerce site at the end of February 2020.
Gross profit increased by 70.1 million dollars or 84.2 percent to 153.4 million dollars in first quarter due to the addition of New Guards brand platform operations and the growth in digital platform services revenue. Gross profit margin in first quarter decreased from 47.9 percent to 46.3 percent year-over-year. Adjusted EBITDA improved by 7.9 million dollars to negative 22.3 million dollars and adjusted EBITDA margin improved from negative 20.7 percent to negative 7.4 percent over the same prior year period. Loss after tax increased by 1.5 million dollars, to 79.2 million dollars in first quarter 2020.
The company added that it further strengthened liquidity position in April 2020 with the private placement of 400 million dollars 3.75 percent convertible senior notes due 2027. Net proceeds of 390 million dollars supplements quarter-end cash and cash equivalents balance of 422 million dollars, which also includes net proceeds from February 2020 issuance of 250 million dollars convertible senior notes to Tencent Holdings Ltd. and Dragoneer Investment Group.