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Farfetch expects to meet profitability targets planned for 2021

By Prachi Singh

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Business

Farfetch Limited in a preliminary financial results announcement for the first quarter ended March 31, 2020 said, it expects to deliver strong digital platform GMV growth, supported by the performance of the China region, which continued to grow faster than the overall marketplace, and from February 1, 2020, accelerated to grow faster year-on-year than this region grew for all of 2019. The company expects to deliver profitability at the adjusted EBITDA level for 2021 as planned.

Commenting on the first quarter, José Neves, Farfetch Founder, CEO and Co-Chair said in a statement: “We have continued to focus on executing on our strategic and financial objectives. We launched our #SupportBoutiques initiative to harness the power of our community to meaningfully help the hundreds of boutiques across our seller base, the majority of which are small businesses. With current retail store closures, travel restrictions, and shifting consumer preference and shopping habits, I expect to see an acceleration of this secular shift to online. We believe our preliminary first quarter 2020 results reflect the strength of our business model in a changing environment.”

Farfetch expects to deliver Q1 results in line with expectations

The company expects digital platform order contribution margin to be in line with fourth quarter 2019, and exceed its targeted minimum of 30 percent. Additionally, the brand platform is also expected to deliver GMV of approximately 105 million dollars, in line with expectations. Farfetch anticipates adjusted EBITDA to be negative 21 million dollars to negative 25 million dollars and a year-over-year improvement in absolute amount.

Towards the latter part of the quarter, the company added that it observed a slowdown in growth from its larger markets in Europe and North America as various countries continued to implement lockdown policies, an increase in promotional activity from some industry participants and brands assessing production capacities for winter collections in light of some factory closures.

The company believes that the secular trends will drive an acceleration of sales to online channels, and return to normalized levels of consumer activity in 2021. In terms of liquidity, Farfetch expects to end first quarter 2020 with cash and cash equivalents of approximately 420 million dollars.

Picture:Facebook/Farfetch

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