Farfetch, the online platform for luxury boutiques, saw shares tumble 22 percent after the group failed to meet its revenue forecast.
The e-tailer saw shares fall in early Friday trading as the forecast for 591 million dollars fell short to the actual of 583 million dollars for the three months ending 20 September.
“We did the best we could to forecast,” said founder José Neves. “We went from hyper-growth to very high growth. That’s all that happened. The reality is, it’s very hard to predict the evolution of explosive sales growth in an unprecedented market environment.”
Barron’s reported that “Farfetch’s digital platform business unit, which includes platforms like BrownsFashion.com and StadiumGoods.com, brought in 828.5 million dollars in gross merchandise value during the third quarter, below estimates of 870.1 million dollars.
Farfetch misses revenue target
The company remains on track to achieve its goal of a full-year adjusted EBITDA and gross merchandise value above its long-term target, Neves said in an earnings call.
Farfetch saw high cost inflation in relation to global shipping and increased duties, which grew over 60 percent year-on-year, compared to GMV growth of 23 percent in the Digital Platform. “We have continued to put consumers first by absorbing some of this cost inflation. This is evidenced by the 53 percent fulfillment revenue growth, which was below the increase in associated costs. The difference reduces gross margins for the Digital Platform.”
“Markdown activity saw gross margins declined from 36.7 percent to 31.7 percent in Q3 2021,” said Elliot Jordan, Farfetch’s Chief Financial Officer.
Looking toward 2022, Neves said Farfetch is on track to launch beauty next year. The company is also investing in advertising technology to launch a media solutions business within two to three years.
2022 will also see the company double down on fulfillment in order to boost the volume of goods shipped from distribution centers in the U.S., EU and China regions.