A few days after speculation arose about a possible delisting of Farfetch from the New York Stock Exchange, there are now further reports suggesting further intensification of the luxury e-commerce company’s financial pressures. The company is understood to have started seeking new funding to stay afloat.
It is suspected that the online retailer is examining a deal with existing partners as a way to raise money, according to sources from the industry magazine Business of Fashion. When contacted by Business of Fashion, Farfetch declined to comment on the matter.
Farfetch could also make a U-turn on its previous strategy of buying up competitors. The company is considering selling Off-White operator New Guards Group (NGG), which it acquired in 2019 for $675 million.
Richemont’s deal to acquire a majority stake in Yoox Net-A-Porter (YNAP) is also at risk of falling through, with the luxury group confirming that after learning of Farfetch’s potential delisting, it “does not intend to invest in the company.” or to grant loans”.
Debt burden and weakened online luxury demand
While Farfetch initially declined to comment on the original report from British newspaper The Telegraph, the company later announced it would delay the release of its third-quarter results, further fueling speculation.
“Farfetch’s move to privatize its business is a strategic response to many market challenges – weakening global online demand for luxury goods, significant debt burdens, liquidity constraints and more,” Joanne Chow, CEO of fashion market index Jellibeans, commented on the rumors. “These factors have likely contributed to Farfetch’s preference to address these operational and financial challenges in private.”
“Farfetch has always positioned itself as a luxury retailer, unlike other e-commerce giants, but may have overlooked consumers’ return to physical retail, travel and dining. This is primarily characterized by a new shift in the luxury sector towards experiential shopping through unique brand experiences. As a result, brands across all sectors need to rethink their strategies, especially those that have relied on the Farfetch marketplace for visibility and sales.”
This translated article previously appeared on FashionUnited.uk