The British fashion e-tailer Farfetch expects gross merchandise value (GMV) on its digital platform to increase by 25-30 percent year-over-year in the second quarter and reach $605 million to $630 million.
It noted that the acceleration in growth highlights the increase in adoption of “online luxury” by consumers, brands and retailers, in part thanks to the reduction in international travel which is driving growth in demand from markets previously under served by established luxury retailers.
Farfetch pointed out that during the quarter it registered an increase in transactions from first-time customers to Farfetch Marketplace, which is expected to enjoy future growth from increased membership to the Access loyalty program, and high levels of customer engagement. The company experienced record traffic to its apps and websites, which increased by more than 60 percent, while app installs have more than doubled year-over-year.
The company enjoyed accelerated demand from Europe and the Middle East and continued strength in China, demonstrating “clear signs of recovery within online luxury” following the Covid-19 outbreak and registered an significant increase in-season stock, for the spring-summer 2020, on its marketplace.
Stronger growth more than offset a decline in the average order value (AOVs), which resulted from a higher percentage of new customers, who initially have lower average AOVs, a higher number of products with lower prices and the impact of foreign exchange rates.
New Guards Group, the Italian luxury design, production and distribution platform Farfetch bought last year, began shipping its new season collections and is expected to deliver $60 million to $70 million to second-quarter GMV. Farfetch says that the unit’s sales reflect some delays in the shipment of the autumn/winter collection as retailers focus on selling the current spring/summer inventory before receiving new products. It noted that overall there is a slower ramp up of the new autumn /winter season on the Farfetch Marketplace compared to last year.
In the second quarter, the digital platform order contribution margin is expected to be above 30 percent and the adjusted Ebitda loss to decline year-on-year, Farfetch says, adding that it continues to target adjusted Ebitda profitability for the 2021 full year.