LONDON — Lockdown has proven lucrative for Farfetch, which said Thursday that second-quarter sales growth will beat analysts’ estimates. Farfetch’s second quarter ends next week, and the company due to update the markets later this summer.
In a Securities and Exchange Commission filing, Farfetch said it expects the gross merchandise value of sales on its digital platform to range from $605 million to $630 million, representing 25 percent to 30 percent growth year-on-year, for the second quarter.
The company said this anticipated performance “reflects the vital role of the Farfetch platform in connecting the global luxury fashion community, particularly as the online share of luxury is expected to continue to grow post COVID-19.”
José Neves, Farfetch’s chief executive officer, said: “Inevitably, lockdown has significantly impacted consumer behavior and we are seeing luxury fashion sales moving online faster than previously anticipated.
“We believe one reason for this is the repatriation of luxury purchases. With international travel massively curtailed, much more consumer spending is happening at home, via the Internet. We expect that the accelerated adoption of online luxury by consumers, as well as brands and retailers, is set to continue as the impact of lockdown lingers, and we believe changed consumer habits will remain in the future.”
The company said the expected digital platform GMV growth reflects a variety of factors, including increased year-on-year transactions from first-time Farfetch customers as well as an expanded loyalty program, which is expected to fuel growth in the future.
In addition, Farfetch said it is seeing “high levels” of customer engagement, as indicated by “record” Q2 traffic to its apps and web sites, which increased more than 60 percent in the period.
It has also been recording “accelerated year-over-year demand from customers across our European and Middle Eastern markets, and continued strength in the China region, demonstrating clear signs of recovery within online luxury following the onset of COVID-19.”
The company said it is witnessing “significant transaction growth” generated by Farfetch Platform Solutions clients. Farfetch Platform Solutions is a white label service under which the company provides back office, operational services to brands that want to sell via their own standalone web sites.
The company said its New Guards Group subsidiary has begun shipping new season collections and is expected to deliver $60 million to $70 million in GMV in the second quarter. Those figures reflect some delays in fall 2020 shipments as retailers continue to focus on selling through their current spring 2020 inventory.
Farfetch said the trend seen at NGG was consistent with the “slower ramp up of new, fall 2020 season product on the Farfetch marketplace as compared to the prior year.”
In the second quarter, adjusted earnings before interest, taxes, depreciation and amortization loss is expected to improve year-over-year, Farfetch said. Additionally, the company said it continues to target adjusted EBITDA profitability for full year 2021.