British online fashion retailer Farfetch Limited saw its sales fall in the second quarter of fiscal 2023, disappointing market expectations. The company’s share price immediately fell by more than 30 percent after the publication of the current figures on Thursday evening.
In the period from April to June, the e-commerce specialist generated sales of 572.1 million US dollars (526.4 million euros). This corresponded to a decline of 1.3 percent compared to the same quarter of the previous year. In contrast, gross merchandise volume (GMV), which also includes the sales of partner brands on the online platform, increased by 1.2 percent (+0.8 percent at constant currency) to USD 1.03 billion.
Weaker demand in the USA and China is slowing down development
In the Digital Platform segment, GMV rose 6.9 percent (+6.6 percent at constant currency) to $944.2 million despite slowing demand in the US and China. A larger number of active customers contributed to this, but the average order value fell due to higher discounts.
In Brand Platform, which includes the Group’s own brands, GMV fell 40.8 percent (-41.9 percent at constant currency) to $63.4 million, reflecting factors including the postponement of delivery dates and a decline in sales Orders from wholesale partners were justified. The group’s own-store GMV shrank 17.5 percent (-18.6 percent at constant currency) to $24.9 million as gains in Europe failed to offset declines in the US.
Management lowers annual forecasts
The lower gross margin helped the company’s adjusted loss before interest, taxes, depreciation and amortization (EBITDA) to grow 26.2 percent to $30.6 million. The bottom line was a net loss of 281.3 million US dollars (258.9 million euros), after a corresponding surplus of 67.7 million US dollars had been reported in the same quarter last year. The significant change resulted not least from the revaluation of various financial instruments. The loss per share was therefore 0.68 US dollars. Adjusted for special effects, it was USD 0.21, exceeding analysts’ expectations.
However, the updated annual forecasts were below market expectations. For 2023, the company now only expects sales of $2.5 billion and GMV of about $4.4 billion. The target for the EBITDA margin adjusted for special effects was capped at +1 percent. Previously, +1 to +3 percent had been targeted.