Jose Neves, Farfetch's founder and ceo.

Farfetch settled some nerves on Wall Street — but still has plenty to prove.

The luxury e-commerce firm posted stronger-than-expected third-quarter revenues and losses that were not as bad as feared. It was a strong enough showing that the company won back some goodwill lost this past summer after disappointing results and a deal to buy New Guards Group muddled the investment picture and tanked the stock.

Shares of Farfetch rose 20.3 percent to $9 in after-hours trading as investors breathed a sigh of relief — although that’s still a long way off from the $30-plus the stock garnered shortly after its initial public offering in September 2018.

On a conference call with analysts, José Neves, chief executive officer and co-chair, painted a picture of a company that is still very much a platform, even as it has started to buy brands, and is still on the path to profitability.

“Farfetch is the sole multibrand luxury platform who can also bring the advantages of a direct-to-consumer e-concession model, including full control over merchandising and pricing, as well as higher margins as compared to the only alternative, which is wholesale distribution,” Neves said.

The ceo pointed to the 100 brands that have joined up in the last year, such as Stella McCartney, Acne Studios, Moschino and Golden Goose, and noted that Farfetch’s top 10 brands, including Gucci, Prada and Fendi, have more than twice as much stock on the platform than a year ago.

That supply helps draw demand.

“We have [average unit values] in the region of $600 and a take rate of 30 percent,” Neves said. “This implies approximately $180 of commission per transaction.…We are the only luxury market place at scale in a $300 billion global industry. With practically all our competitors being retailers. Not only does this set us apart as the most strategic partner to the luxury brand, but we are also capturing market share from these retailers at a remarkably fast pace.”

That’s the picture Wall Street bought into when Farfetch went public in September 2018, pushing the value of the company over $8 billion.

A big part of the appeal was that the company could in theory produce big-time profits by serving more shoppers and retailers without getting bogged down by lots of additional costs.

But that narrative started to change as the group agreed to buy sneaker marketplace Stadium Goods for $250 million in December, spent $50 million to merge JD.com’s Toplife into its China operations in February and, most significantly, put up $675 million to buy New Guards Group in August.

While the New Guards Group — which owns or has the license for Heron Preston, Palm Angels and Virgil Abloh’s Off-White — brought in some new buzzy names, it also brought in some of the inventory risk of an apparel producer.

And the acquisition came at a time when Farfetch expressed concerns about promotions in the marketplace and pulled back the reins some, which ultimately slowed gross market volume growth on the digital platform to 37 percent in the third quarter from 44 percent in the second percent.

But Neves said it was the right call and also touted New Guards as an an “asset lite” producer that uses a platform model itself and offers quite a bit of cache.

“Last, we are building a unique brand with strong cultural relevance,” Neves said. “We want to be the first and the last destination for people who love fashion. The source of inspiration for fashion lovers, but also the place where you find that unique piece you were looking to buy and it’s available only on Farfetch.

“The recent acquisition of NGG is a significant step in that direction,” he said. “And the halo effect of the original content is brand platinum will create a unique DNA for Farfetch brand.”

He said New Guards’ portfolio “sold more on Farfetch in Q3 than any other single brand, which demonstrates on one side the incredible compatibility of the two businesses from a consumer perspective, but also the extraordinary capability that NGG has of bringing the most sought-after labels market. Labels that were practically nonexistent just six years ago.”

While Farfetch’s net losses for the quarter widened to $85.5 million from $77.3 million, its losses per share narrowed to 28 cents a share from 30 cents. Adjusted earnings per share of 18 cents came in well ahead of the 37-cent deficit analysts had penciled in.

Revenues for the three months ended Sept. 30 rose 89.9 percent to $255.5 million, up from $134.5 million a year ago, and ahead of the $243.6 million analysts projected.

Investors had been waiting anxiously for the results, looking for signs that the company’s business model is becoming more clear or that its growth will provide enough promise to cut through the confusion.

And some analysts weren’t waiting for results before making their call on Farfetch.

Bernstein analyst Luca Solca downgraded his rating on the company’s stock to underperform on Wednesday, raising worries about Farfetch’s cash burn.

Solca wrote in an analysis: “The investment controversy has shifted to financial sustainability. What moves the stock today is the debate on whether or not Farfetch will have to go back to the market to refinance, as it burns cash too fast. Whether the ‘Uber of luxury distribution’ vision is achievable or not seems no longer the point, while Farfetch morphs into something else through M&A.

“Farfetch has to give up on the ‘winner takes all’ idea, in our view, on the back of breakneck growth via heavy promotions: the original boutiques can take no more, brands don’t like it and won’t play ball,” Solca said. “Signs that Farfetch can reduce losses would give the share price some oxygen short-term….Farfetch is no Uber of luxury goods distribution: most of the luxury goods brands worth their salt already have limousines of their own.”

But Neves on the call was clear that he saw Farfetch as well positioned to capture the “lion’s share” of the $100 billion incremental online growth projected for the luxury business.

And chief financial officer Elliot Jordan said the company has the cash it needs, with $318 million on the books at the end of the quarter and a 300 million euro secured loan that has not been tapped into yet.

“Both of those positions puts me in a very comfortable position,” Jordan said.

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