After a year filled with surprising developments, Farfetch appears to be continuing its trend of unexpected moves. The online luxury retailer revealed this week that it will not be disclosing its financial results for the third quarter of 2023, and the scheduled conference call for the same has been canceled.
“The company expects to provide a market update in due course,” Farfetch said in a statement on Tuesday (Nov. 28). “The company will not be providing any forecasts or guidance at this time, and any prior forecasts or guidance should no longer be relied upon.”
This decision comes as a bit of a surprise, especially considering that the call was slated for Wednesday (Nov. 29). The anticipation surrounding the call was heightened by recent speculations regarding Farfetch founder Jose Neves contemplating the privatization of the company.
Additionally, Cartier owner Richemont expressed no interest in investing in Farfetch. The absence of the expected financial update adds an extra layer of intrigue to the unfolding narrative of Farfetch.
Anticipating Farfetch’s future trajectory remains a challenge, yet we can delve into its journey over the past year and examine the factors that contributed to this outcome.
At the beginning of the year, PYMNTS highlighted that the luxury retail marketplace encountered challenges related to inventory and macroeconomic factors, akin to other companies in the sector. Nevertheless, it persisted in its commitment to pursuing additional deals and establishing itself as the destination for high-end shoppers globally.
“Our Q4 results reflect higher than expected GMV [gross merchandise value] from the marketplace, which was supported by strong supply growth from our luxury sellers,” Neves said during the company’s Q4 2022 earnings call in February.
He then outlined an internal restructuring of the platform, geared towards fostering growth in 2023 with the ambitious goal of reaching $10 billion in GMV within about 24 months. This initiative comes on the heels of nearly doubling GMV since the onset of the pandemic in 2020.
In May, Farfetch shifted its focus toward artificial intelligence (AI) as it proved instrumental in its turnaround, which was made evident from its first-quarter 2023 earnings report, following two consecutive quarters of sales decline.
The online retailer achieved 8% year-over-year (YoY) revenue growth, surpassing analysts’ projections.
PYMNTS reported that various factors played a role in Farfetch’s growth. The company’s success was linked to an improved inventory management strategy, resulting in higher sales, and performance was bolstered by strategic partnerships with brands like Reebok.
At that time, Neves aimed to continue the implementation of cost-cutting measures, the formation of strategic partnerships, and position Farfetch as a pioneer in AI.
“We’re developing three proofs of concepts, three prototypes, which I’ve seen already and made me very excited personally as a technologist,” Neves said in May. “It can’t be just a mechanical robotical conversation. It has to be an inspirational, engaging conversation. And even in the early different elements, we’re already seeing that, and the way the models learn and get better very quickly, [it’s] quite impressive.”
Read more: AI Fuels Farfetch’s Return to Growth
Then in August, Farfetch confirmed the discontinuation of beauty product sales, just a year after entering the market.
In January 2022, Farfetch acquired the upscale beauty retailer Violet Grey, and in a span of three months the company introduced a range of beauty brands on its platform, featuring names such as Augustinus Bader, Charlotte Tilbury Beauty, and Dr. Barbara Sturm. Following this, the marketplace further broadened its offerings to include Isamaya Ffrench and Simi Haze.
As the company geared up to conclude its online beauty sales, it was observed that Farfetch maintained control of Violet Grey as an independent entity within the Farfetch Group.
Nevertheless, Farfetch’s choice underscored the challenge confronting retailers in the industry: How to establish a foothold amid stiff competition from industry giants like Sephora and Ulta.
In fact, in June, PYMNTS disclosed that Ulta Beauty derived 95% of its sales from its dedicated members.
This week, there are speculations circulating that Neves, holding a 15% stake and 77% of the voting rights, is collaborating with advisers at JPMorgan to privatize the company.
When contacted by PYMNTS, a spokesperson from Farfetch opted not to provide any comments on the report.
And on Wednesday (Nov. 29), Richemont declared that it has no plans to invest in the luxury retailer Farfetch.
“Richemont would like to remind its shareholders that it has no financial obligations towards Farfetch and notes that it does not envisage lending or investing into Farfetch,” stated Richemont in a released statement, as reported by Reuters.
Farfetch’s shares fell 64% during year. However, following the public disclosure of Neves’ efforts, the stock surged by 20%.