Farfetch Posts Mixed Q3 Results; Shares Plunge 22%

Shares of Farfetch Ltd. (FTCH) plunged more than 22% in the extended trading session on Thursday after the company’s revenues for the third quarter of 2021 fell short of analysts’ estimates.

Don't Miss our Black Friday Offers:

Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter

U.K.-based Farfetch is an E-commerce platform for luxury fashion with customers in more than 190 nations and territories. The platform offers products from over 50 countries and more than 1,400 brands, boutiques and department stores across the world.

Earnings and Revenue

The company reported an adjusted loss of $0.14 per share, narrower than the year-ago loss of $0.17 per share and the Street’s loss estimate of $0.36 per share.

Revenue increased 33.1% year-over-year to $582.6 million, missing analysts’ expectations of $591.34 million.

Segment Revenues

Digital Platform revenue grew 26.5% year-over-year to $397.1 million, Brand Platform segment revenue was up 47.2% to $165.3 million, and In-Store revenue rose 76.6% to $20.2 million.

GMV

Farfetch’s Gross Merchandise Value (GMV) jumped 27.5% year-over-year to over $1 billion. GMV of the Digital Platform segment surged nearly 23% to $828.5 million.

Branded Platform GMV climbed to $165.3 million from $112.3 million in the third quarter of last year. Finally, In-Store GMV more than doubled year-over-year to $23.6 million.

Other Highlights

Gross margin fell 450 basis points to 43.3% and adjusted EBITDA margin improved to 1.1% from a negative 2.7% in the previous year.

Meanwhile, the company ended the quarter with cash and cash equivalents of $1.35 billion. (See Insiders’ Hot Stocks on TipRanks)

CEO Comments

The Chairman and CEO of Farfetch, José Neves, said, “I’m thrilled by Farfetch’s continued track record of delivering aggressive market share capture as we accelerated two-year stack Digital Platform GMV growth to 97% in the third quarter, and remain on track to achieve our goal of full-year adjusted EBITDA profitability and GMV growth above our long-term 30% CAGR target.”

Outlook

The company expects Digital Platform GMV growth in the range of 18% to 22% in the fourth quarter. It also expects GMV of Brand Platform segment to rise by 20% to 25%, and adjusted EBITDA to total around $40 million.

For full-year 2021, Farfetch anticipates Digital Platform GMV growth of nearly 33% and adjusted EBITDA to stand at $5 million.

Analyst Recommendation

Overall, the stock has a Moderate Buy consensus rating based on 8 Buys, 1 Hold and 1 Sell. The average Farfetch price target of $57.6 implies 26.3% upside potential. Shares have lost 26.5% year-to-date.

Website Traffic

TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Farfetch’s performance.

According to the tool, compared to the previous year, the company’s website traffic registered a 13.3% fall in global visits in October. However, the website traffic has increased 1.1% year-to-date against the same period last year.