“The vast majority of Farfetchers have been productively working from home,” the founder and chief executive officer said in a letter to shareholders Thursday. “Throughout this situation, we have been able to safely continue serving our consumers and this industry we love without any material impact to our operations and supply chain to date.”
While Farfetch started last year to move into the business of making goods and holding at least some inventory with the acquisition of the Off White licensee New Guards Group, the business is based off a platform approach, connecting buyers and sellers and coordinating the transaction.
That leaves Farfetch relatively well positioned in a world where inventory is suddenly a big problem, with stores closed and warehouses backed up with goods that will eventually be released into the market, likely at steep discounts.
But Neves noted Farfetch was born into chaos and is performing well now.
“When I launched Farfetch it was October 2008,” he said. “Two weeks later, Lehman Brothers collapsed, triggering the avalanche which led to the Great Recession. Through that challenging economic period, it became clear that Farfetch’s mission transcended being the global platform for luxury fashion, and that by connecting curators of fashion with consumers all around the world, we were enabling retailers to navigate those turbulent times in 2008 and 2009….Today…I see that same platform DNA coming to life in an even more salient way.”
Still, there have been disruptions. Two-hundred of Farfetch’s 1,200 sellers are offline, but the company’s fulfillment operations in the U.K., Italy, United States and China have remained operational.
And Neves said: “Delays in the deliveries of fall-winter 2020 merchandise due to manufacturing shutdowns will impact our sellers’ inventory levels. We expect to see delays in deliveries to boutiques, although we also expect e-concession channels such as our marketplace to be prioritized by brands given the higher profitability vis-à-vis wholesale.”
The ceo, like others, sees COVID-19 accelerating the shift to online, but said it was unclear just when that move would offset the headwind of consumer sentiment.
Farfetch expects its gross merchandise volume for the first quarter ended March 31 to grow by 43 percent to 46 percent.
The quarter’s adjusted losses before interest, taxes, depreciation and amortization are expected to range from $21 million to $25 million.
Farfetch has suspended its 2020 fiscal guidance, but is sticking to its plan to post adjusted earnings before interest, taxes, depreciation and amortization for the full year in 2021.