LONDON — There’s nothing like a high-profile acquisition to get bankers trilling about a potential stock market listing, and Farfetch’s recent deal-making has certainly given them much to sing about — although they may be carrying that tune for a while.
This story first appeared in the June 14, 2017 issue of WWD. Subscribe Today.
On Tuesday, the $1 billion-plus online retail platform Farfetch revealed the purchase of Style.com, Condé Nast’s fledgling e-commerce site that failed to take flight following its launch last September.
Style.com has already discontinued operations, and the site now redirects to Farfetch.com. Farfetch has purchased the Style.com trademark, inventory, customer database and intellectual property.
The Style.com deal, the terms of which were not disclosed, was the latest in a string of high-profile moves by Farfetch founder and chief executive officer José Neves so far this year.
In the spring, Farfetch welcomed Natalie Massenet as a co-chairman and unveiled its Store of the Future, which aims to link online and off-line retailing.
The digital retail platform also created a share option scheme for all employees as it announced that revenue grew 70 percent in fiscal 2016, based on the value of goods traded.
So it’s no wonder rumors of an IPO have been flying, with Sky News reporting that Farfetch is planning to hire bankers for a New York flotation that could value the site at up to $5 billion.
Although Neves has talked about an IPO as a future option for Farfetch, he has also said there’s still much work to be done and it’s only something he’d contemplate in the long term.
On Monday, Neves declined to comment on the latest rumor, and industry sources said they aren’t holding their collective breath for an initial public offering anytime soon.
“An IPO is completely speculative right now. It’s just bankers talking. It’s not happening,” said one well-placed source.
Even without an IPO, Neves’ plate is full. In an interview Monday, he billed the Style.com deal as a long-term “content and commerce” partnership with Condé Nast that will leverage both companies’ strengths.
Jonathan Newhouse, chairman and ceo of Condé Nast International, will join the Farfetch board, and Neves said he views their new partnership as a “doubling-down” of an already fruitful relationship with Condé.
In 2013, the publisher of Vogue, GQ and Vanity Fair led a $20 million round of funding into Farfetch, landing alongside investors including Advent Venture Partners, Index Ventures and E.ventures.
Although the collaboration has yet to be defined, Neves said the two partners are going for a “seamless editorial shopping experience,” that will offer readers the opportunity to browse and shop Condé Nast’s editorial content on a global scale, beginning with Vogue and GQ in the U.S.
A tech connection has also been created that will enable Farfetch to integrate its products into Condé Nast’s content, while shopping guides created by Condé Nast’s publications will highlight products from Farfetch, which sources items from more than 500 luxury boutiques worldwide and offers customers nine language options and same-day delivery in 10 cities.
The deal will also aim to “ease the distribution” of shoppable content across Condé Nast digital and social platforms, according to the partners. Going forward, the plan is for Condé Nast and Farfetch to collaborate on rolling out “innovative content and commerce experiences” for customers.
Newhouse has called the deal an “industry-defining collaboration,” and thanked the Style.com team for their “dedication, energy and commitment.”
Anna Wintour, artistic director of Condé Nast, said she’s always believed that what sets Condé Nast apart “is our voice and our vision. Partnering with Farfetch only enhances that, and brings a new dimension to all that we offer the world.”
In an address on Tuesday morning to the 75 Style.com staff, Newhouse expressed much regret.
“Three and a half years ago Condé Nast started Style.com with the aim of creating a worldwide e-commerce business. It has attracted some 300 brands while operating in a very tough, competitive marketplace. There is a great deal to be proud of,” he said. “Style.com was a new business in a new kind of industry, which did not even exist 20 years ago. Sadly, the results of the business have fallen very far short of where we hoped they would be.”
As a result, Newhouse said the company decided to make the strategic decision to cease all business operations and to sell Style.com’s assets “to one of the leading business players, Farfetch, with whom our parent company Advance already has an association.”
Newhouse added that the decision was made “only after all other alternatives were explored. It has been a painful decision to make, and I know it is painful for all of you. You worked with tremendous dedication, energy and commitment to make a great product. But in the end it was not enough to achieve the success we hoped to make.”
He said some employees would find future opportunities at Condé Nast, and added that Farfetch also had some jobs going.
The deal with Farfetch is the latest iteration of Style.com, which has morphed awkwardly over the years from a web site that showcased up-to-the-minute runway images to one that posted reviews, street style and lifestyle content.
It later published a magazine to complement the digital content and was brought under the same umbrella as WWD, when the latter was owned by Condé Nast.
The magazine was shuttered when Condé decided it would turn Style.com into an e-commerce player, but from the moment the new business was unveiled, analysts and industry observers were skeptical, questioning how Condé could ever compete with the online luxury retail giants and how it could convince editors and staff to start thinking more commercially.
Many also pointed out that Condé Nast is a publisher, not a retailer.
Condé, which says it has an audience of more than 340 million, had billed Style.com as a “connector” between the magazines and the products, one that could offer an added layer of service to readers.
Using the latest technology, the aim was to bind together reading and shopping so tightly that the two would come to feed each other, and hopefully generate a big revenue stream for the company.
The plan was to hold no stock and engage the customer up to the point of sale, with merchants fulfilling the orders. The new site rolled out in the U.K. with Vogue and GQ initially, and was meant to encompass all Condé titles internationally. Two channels were planned: the magazines themselves and the Style.com site.
It made little headway in a market that has been moving at lightning speed.
The U.S. launch was delayed indefinitely, while big brands, including those owned by LVMH Moët Hennessy Louis Vuitton, never climbed aboard. Instead, LVMH this month launched its own site through Le Bon Marché, called 24 Sèvres. There’s more to come as so many luxury brands become more aggressive in the field of e-commerce.
Industry sources also said resources were tight at Style.com, despite the reported $100 million investment in the site, and the money just wasn’t there to compete with online giants such as Yoox Net-a-porter.com, Matchesfashion.com and Mytheresa.com, which have been developing and launching new technologies at warp speed.
Those sites have also quickly developed their own slick print and digital titles, and are finding ways to engage the consumer online and keep her communicating, browsing and shopping.
Neves, who has consistently been opening different business streams into Farfetch, sees the Style.com deal as a way to enrich content, which is key for e-commerce companies as they aim to engage readers and entice them into purchasing again and again.
“We have long felt that inspirational content is a natural part of any luxury shopping experience. In the same way as we empower the fashion industry and connect consumers with the world’s best brands and boutiques, we want to connect them with outstanding content,” Neves said.
Massenet, the newly appointed co-chairman of Farfetch, founder of Net-a-porter, and a former fashion stylist at Condé Nast in the U.K. said that for the consumer, it will “be a joy to move from inspiration to transaction at any time and any place. And for the brands and international boutiques that have always partnered with Condé Nast, this will further enhance their presence in Condé Nast’s media.”