While reporting an encouraging reduction in losses for the fourth quarter of 2018, Farfetch announced last month major partnerships with the exclusive Harrods department store in London and JD.com, the second-largest e-tailer in China. The bigger Alibaba Group had previously struck a similar deal with Yoox-Net-a-Porter.
Consolidating its position as a leading online destination for luxury goods shoppers, Farfetch said that Harrods had selected it as its exclusive e-tailer. As it has already agreed to deal with Burberry, Farfetch will use its own Black & White marketplace to provide Harrods with e-commerce management and international logistics and technical support.
Farfetch also announced its acquisition of Toplife, the high-end online shopping platform of JD.com, for $50 million. With the integration of Toplife into Farfetch's Chinese operations, JD.com's 300 million users will have direct access to Farfetch's marketplace and its offer of more than 1,000 luxury brands and stores.
JD.com is already a major shareholder in Farfetch, in which it invested $397 million in 2017, prior to last year's successful public offering. Also, Farfetch recently started to make use of JD.com's Chinese logistics network and its consumer data.
Chinese consumers purchased $121 billion worth of luxury goods last year, according to the Boston Consulting Group. This would amount to one-third of global consumption of these products – a share that is projected to increase to 40 percent by 2024.
Farfetch also reported last month a huge 55 percent increase in revenues for the fourth quarter to $195.5 million, accompanied by rises of 58 percent in orders and 45 percent in the number of active customers as compared to the year-earlier period. Including the operations of its marketplace, the gross merchandise value (GMV) jumped by 51 percent to $466 million.
The company still reported an adjusted Ebitda loss of $14.5 million for the quarter, but it was lower than the $23.4 million loss of the prior period, although the gross margin declined by three full percentage points to 48.2 percent due to smaller orders and higher investments in the company's loyalty program and other customer-oriented initiatives.
For the full financial year, Farfetch had negative Ebitda of $95.9 million on revenues of $602 million, up from an Ebitda loss of $58 million in 2017, and the net loss increased to $155.5 million from $112.2 million.
GMV grew by 56 percent to $1.4 billion for the year, with increases of more than 50 percent in all the three main regions of the world – Americas, Asia-Pacific and Europe, Middle East and Africa – and the management expects the momentum to continue in 2019.