José Neves Hypes Farfetch’s Growth Trajectory, Talks Reebok
José Neves said the light is about to shine down on Farfetch — pointing to continued strength in luxury and a series of partnerships coming online with Reebok, Neiman Marcus and Ferragamo.
As usual, the company’s founder, chairman and chief executive officer is thinking big.
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“It’s a big ambition that we’re going for,” Neves told WWD after the company took a step back in the fourth quarter, but topped Wall Street estimates. “We want to be the global platform for luxury. We’re seizing this big opportunity, which is the digitization of the luxury space.”
The company reorganized and cut costs last year while also logging gross merchandise volume of $4.1 billion — nearly doubling its GMV since the onset of the pandemic.
Still, last year was a tough one for Farfetch, which closed its business in Russia, saw COVID-19 lockdowns in China hurt sales and struggled against a strong dollar.
As the company starts to anniversary at least the first two of these factors, trends will start to look better, but Neves said nothing has changed — that Farfetch was strong all along.
“As these things comp, the underlying growth that has always been there shines through and we have the new deals, with Ferragamo, Neiman Marcus, Reebok combining to deliver what we think is going to be a great year for Farfetch,” he said.
While Farfetch is stepping in to help manage e-commerce operations for Ferragamo and Neiman Marcus, the Reebok deal really illustrates the company’s breadth.
As Adidas sold the brand to Authentic Brands Group, Farfetch cut a deal to take on the business in Europe and also snagged global rights to make a premium line, which Neves said would be called “Reebok Catalyst.”
“The most important thing is the strategy here,” Neves said. “We see a tremendous opportunity here with Reebok,” which he argued was the “oldest brand to launch, for example, running sneakers.”
This year, Farfetch will take on the mainline Reebok business in Europe and start teasing the premium Reebok Catalyst, which will cover apparel and sneakers.
Neves said with Adidas’ rupture with Kanye West and his Yeezy brand, Nike has a “quasi monopoly” on the premium sneaker space.
The CEO said that “opens the potential for other premium sneaker offerings” and that Farfetch’s New Guards Group is ready to jump in.
“We have both the cultural clout and the know-how to really inject a totally new energy into Reebok,” he said.
Farfetch is expecting the brand to add $250 million to $300 million in business this year.
“We’re going to try to make sneaker history this year,” Neves said.
While the company is clearly forward-looking, there was also some solace in the fourth quarter for Farfetch.
Losses for the three months ended Dec. 31 tallied $176.7 million and compared with earnings of $96.9 million a year earlier. But adjusted losses per share of 25 cents for the fourth quarter were much better than the 47-cent deficit analysts anticipated.
Wall Street — which tends to run hot and cold on Farfetch — breathed a sigh of relief and sent shares of the luxury e-commerce platform up 10.9 percent to $5.49 in after-hours trading Thursday.
Fourth-quarter revenues fell less than the 6.2 percent expected, dipping 5.5 percent to $629.2 million with digital platform services revenue off 2.1 percent to $422.2 million and the brand platform, which includes Palm Angels and Farfetch’s Off-White business, down 16.2 percent to $98.2 million.
GMV fell 11.6 percent to $1.1 billion for the quarter, a dip of 5.3 percent in constant currencies.
Farfetch set its targets for this year at GMV of about $4.9 billion and an adjusted earnings before interest, taxes, depreciation and amortization margin of 1 to 3 percent.
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