Farfetch posted its first quarterly positive adjusted operating profit, but its net losses increased dramatically due to some $2.1 billion in non-cash adjustments. The company expects to finish 2021 with an adjusted operating profit.

In the fourth quarter, the British fashion e-tailer saw gross merchandise value (GMV) increase by 42.8 percent year-on-year in the fourth quarter to $1,057 million. GMV of its digital platform business rose by 49.4 percent to $939.4 million, driven by strong order growth and new consumer acquisition. However, it experienced a decrease in average order values across the digital platform from $636 to $626 partially due to fewer items per basket. Excluding the impact of changes in foreign exchange rates, the increase in GMV for the digital platform reached 48.8 percent.

GMV for the company’s brand platform rose by 2.3 percent to $103.9 million, affected by a delay in shipments of the spring-summer collections.

During fourth quarter 2020, Farfetch also saw year-over-year growth in transactions through third-party websites supported by Farfetch Platform Solutions, primarily driven from incremental activity from new e-commerce sites launched throughout 2020, including Harrods.com, Off—White.com and Palmangels.com.

Group revenues increased by 41.3 percent to $540.1 million and the gross profit margin was stable at 46.1 percent. Adjusted Ebitda was a positive €10.4 million against a negative $17.9 million, however, the net loss widened to $2,281 million from $110.2 million a year earlier.

Farfetch’s results were affected by $1,891 million of fair value losses on embedded derivative liabilities, a $166.7 million loss on remeasurements on put and call options and $36.3 million in impairments on intangible assets.

In the first quarter, Farfetch expects GMV of its digital platform at $740-770 million, up by 50 to 55 percent year-over-year, and GMV of the brand platform at $95-105 million. It forecast adjusted Ebitda to be a negative $19-21 million.

For the whole of 2021, it predicts GMV of $3.6-3.7 billion, up by 30-35 percent year-on-year, with a positive adjusted Ebitda margin of 1-2 percent, compared with a negative 3.2 percent in 2020.

On March 1, Farfetch launched its digital store on Alibaba’s e-commerce platform Tmall. In November 2020, Farfetch entered a global partnership with Alibaba, Richemont and the Pinault family, which owns the French luxury goods company Kering. The alliance aims to provide luxury brands with “enhanced access” to the Chinese market as well as accelerating the digitization of the global luxury industry.