Farfetch reportedly seeking investment amid financial pressure

Days after speculation began circulating surrounding the potential delisting of Farfetch on the New York Stock Exchange, additional reports have now alluded to a further heightening of the luxury e-commerce company’s financial pressures as it is understood to have begun the search for fresh funding in order to keep afloat.

The e-tailer is believed to be scouting out a deal with existing partners as one of the methods through which it hopes to raise cash, according to sources for the Business of Fashion, which noted that Farfetch had declined to comment on the matter.

The media outlet added that Farfetch may also be taking a U-turn on its strategy to snap up competitors, noting that the firm was reportedly considering a sale of Off-White operator New Guards Group (NGG), which it had acquired for 675 million dollars in 2019.

It comes as its formerly impending deal with Richemont to acquire a near-majority stake in Yoox Net-A-Porter (YNAP) appeared to come to a halt, as the luxury conglomerate confirmed that, on hearing of Farfetch’s delisting contemplation, it “does not envisage lending or investing” in the firm.

Debt load and weakened online luxury demand

While Farfetch had initially refused to make a statement on the initial report made by The Telegraph, the company later announced that it would be delaying the publication of its third quarter results, further fueling speculation.

Commenting on the rumours, Joanne Chow, co-founder and CEO of fashion market index Jellibeans, said: “Farfetch’s move to privatise its business is a strategic response to many market challenges – a weakening online global luxury demand, significant debt load, cash bum and more. These factors have likely contributed to Farfetch’s preference to tackle these operational and financial challenges without public market scrutiny.

“Farfetch has always positioned itself as a luxury retailer, unlike other e-commerce giants, but may have overlooked the eventual return of consumers to physical retail, travel, and dining. This is notably marked by a new shift in luxury toward experiential shopping through unique brand experiences. As a result, there is a need for brands across the board to reassess their strategies, particularly those that relied on Farfetch’s marketplace for visibility and sales.”