London-based luxury online marketplace Farfetch files for IPO
by Lauren Hirsch
Published 9:30 AM ET Mon, 20 Aug 2018
London-based luxury online marketplace Farfetch filed for an IPO on Monday and plans to list on the New York Stock Exchange under the ticker FTCH.
Sources previously told CNBC the company is aiming for a valuation as high as $5 billion.
In fiscal 2017, Farfetch generated revenue of $385 million, a 59 percent jump over the previous year. It reported an after-tax loss of $112,275, down from a loss of $81,459 the previous year.
Farfetch and peer Yoox Net-a-Porter have been able to thrive by occupying a niche that Amazon has yet to be conquer: luxury fashion. The world's most elite labels have resisted selling on the Seattle giant's website, suspicious of its ability to maintain the integrity of their brand.
The global market for personal luxury goods was estimated to be worth $307 billion in 2017, according to the filing, citing Bain. It is expected to reach $446 billion by 2025.
Cementing the value luxury companies see in the upper echelons of online retail, Cartier-owner Richemont earlier this year offered up to 2.8 billion euros ($3.4 billion) to buy the stake of Yoox it did not previously own.
Unlike typical retailers, Farfetch does not own the inventory it sells, but rather serves as a conduit for brands and boutiques. As such, it can avoid the complicated task of predicting what customers want and the expense of holding it in stock. Such "marketplace" companies, like eBay, Amazon, JD.com and Alibaba often trade at a higher premium than traditional retailers. A $5 billion valuation would take advantage of that premium, pegging Farfetch against them.
Farfetch touts itself as a marketplace for the global fashion consumer. It connects shoppers to over 700 brands and boutiques internationally, selling established lines like Gucci and emerging ones like Gabriela Hearst. It prides itself on curation and inspiration, allowing shoppers to navigate by brand, item or its stylized edits. It express ships to more than 190 countries.
"We are a technology company at our core and have created a purpose-built platform for the luxury fashion industry. Our platform consists of three main components: applications, services and data," the company wrote in the filing.
Farfetch has grown through a number of partnerships that have helped it broaden its distribution, offerings and capabilities. Its deal with JD.com in Asia and the Chalhoub Group in the Middle East provide distribution and logistics support in those respective regions.
Its partnership with Conde Nast, announced last year, integrates the magazine publisher's content with Farfetch's shopping platform. Its Style.com website also now redirects to Farfetch.
In 2015, Farfetch purchased London fashion boutique Browns. It is using Browns as one of its testing grounds for new retail technology in what it calls the "store of the future." Offerings include touch-screen-enhanced mirrors and connected clothing racks.
Farfetch also launched Black and White, an infrastructure platform that luxury brands can use to develop their own e-commerce business.
Farfetch was founded in London in 2008 by Portuguese entrepreneur Jose Neves. It has offices in 11 cities, including London, Tokyo and Los Angeles.
Its global investor base includes France's Eurazeo and Singapore's sovereign wealth fund Temasek.