Farfetch profits and sales drop as its brand platform suffers

Farfetch has revealed its revenues decreased to $572.1m (£450.1m) from $579.3m (£455.7m) during Q2 2023, representing a year-over-year decrease of 1.3%, according to its trading update for the second quarter ending June 2023. The group said that the decline was primarily driven by a 42.2% decrease in Brand Platform Revenue to $67.4m (£52.96m), as well as a 15.1% decrease in In-Store Revenue to $22.7m (£17.84m). However, these decreases were partially offset by an increase in Digital Platform Revenue of 10.5% to $482.0m (£377.18m). The fashion retailer also reported that its gross profit dropped from $267.m (£210.6m) in Q2 2022 to $242.9M (£191.1m) Q2 2023. Additionally, gross profit margin decreased 370 bps year-over-year to 42.5%, driven primarily by the decline in Digital Platform Gross Profit Margin. Adjusted EBITDA declined $6.3m (£4.95m) to a loss of $30.6m (£24.05m) for second quarter 2023, representing a 26.2% decline. Looking ahead, Farfetch said it expects revenue of approximately $2.5bn (£1.96bn), up from $2.3bn (£1.81bn) in 2022 for FY 2023 as of 17 August 2023. It also expects its Adjusted EBITDA Margin to increase by 1%, improving from (5)% in 2022. José Neves, Farfetch founder, chairman and CEO, said: “Our Q2 results show Farfetch is growing, becoming more efficient, and executing on our key strategic priorities. We have also taken decisive action to adapt to the macro environment of the last 18 months. “2023 is set up to be a great year for Farfetch, toward strong GMV growth, Adjusted EBITDA profitability and positive free cash flow. All the while we remain steadfast on delivering our strategic vision of becoming the global platform for luxury.” Elliot Jordan, Farfetch chief financial officer, added: “I’m pleased with our second quarter performance, which demonstrates our progress towards delivering profitable growth and positive free cash flow in 2023. Our Digital Platform has performed particularly well, returning to growth while maintaining a stable order contribution margin. “This, coupled with significant savings in the cost base across all areas of the business, means our digital platform is more profitable than last year. We enter the second half well positioned to achieve faster levels of growth, with a lower cost base and strong liquidity.”