While this allows the company to solidify its position in one of the last areas of strength in a weak and chaotic consumer market, the platform is still waiting for those high-end dollars to flow into its bottom line.
No more WWD
Now the company is cutting costs as it seeks to deliver on its promise to generate adjusted earnings before interest, taxes, depreciation and amortization next year.
wackyThird quarter revenue increased 1.9% to $593.4 million, an increase of 14.1% at constant exchange rates. The value of goods sold through its platform, or gross volume of goods, fell 4.9% to $967.4 million, which would have been a 4.2% increase at constant currencies.
The quarter saw difficult year-over-year comparisons as Farfetch halted operations in Russia following the invasion of Ukraine and was also impacted by COVID-19 related restrictions in China. Russia and China were two of the platform’s three largest markets last year.
Farfetch’s active customer count for the quarter increased 8.6% to 3.9 million from a year earlier. And gross profit margins rose 160 basis points to 44.9% and adjusted losses before interest, taxes, depreciation and amortization reached 4.1 million.
The company’s net losses for the quarter ended Sept. 30 totaled $274.9 million and compared to profits of $769.1 million a year ago, when a $901 million gain from the fair value of investments significantly boosted results.
Investors were feeling nervous and sent shares of the company down 9.7% to $8.25 in aftermarket trading on Thursday.
But José Neves, Founder, Chairman and CEO, told analysts: “Luxury is an incredible industry, which has demonstrated its resilience over the decades and is expected to grow from around $350 billion in 2022 to more than $500 billion. billion by 2030. Farfetch has built a platform for this industry in pursuit of a unique mission that sees us more galvanized than ever as we continue to navigate the challenging macro environment.
Neves said the company took the opportunity of a tough market to streamline.
“In this year of macro headwinds, we have been focused on continuing to streamline our cost base,” Neves said. “In line with this, we have taken the opportunity to re-engineer the entire Farfetch organization to capture upcoming business milestones with a focus on efficiency and profitability.
“And while that continues, I am pleased with the initial results and the performance of our dynamic management team in this new setting,” he said. “This reorganization allows us to fundamentally restructure our workforce mix and our cost base.”
Neves added: “In 2023, we expect to return to solid growth while delivering adjusted EBITDA profitability and positive free cash flow.”
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