Farfetch, the London-based online clothing marketplace, filed plans earlier this week for an initial public offering, seeking to list its Class A stock on the New York Stock Exchange under the symbol FTCH. The company filed for a $100 million offering but this is just a placeholder figure that is expected to change later.
The company connects online buyers with 375 brands and 614 luxury retailers around the world that sell directly through its website. Farfetch makes money by charging fees for every successful sale done on its site. Farfetch does not own stores or keep inventory.
Some of the brands available on Farfetch Marketplace include Alexander McQueen, Prada, Dolce and Gabbana, Fendi, Gucci, Valentino, Stella McCartney, and Saint Laurent. These brands sell jackets, bags, coats, dresses, jewelry, knitwear, swimwear, shorts, trousers, shoes, suits, and accessories.
Despite being a relatively new high-end fashion retailer, Farfetch has already reached over 2.3 million customers in 190 countries. The number of active users on the platform currently stands at one million, and that figure is expected to continue growing as the firm keeps offering latest and unique fashion products designed by leading brands.
The company generated revenue of $386 million last year, and revenue through the first half of 2018 is up 55 percent ahead of the last. But Farfetch is yet to report a profit. Last year, it posted a loss of $112 million, and losses have ticked $67.7 million in the first half of 2018 compared to $29.7 million in the year-ago period.
Farfetch can capitalize on the increasing surge in luxury fashion items sold over the internet to make money. Its affluent customers are eager to lay their hands on high-end fashion that the general public cannot afford. It is also counting on millennials to be its key customers, alongside generations X and Y.
Farfetch’s filing with the Securities and Exchange Commission did not disclose its valuation. However, a successful U.S. listing could give the firm a valuation of $5 to $6 billion. Its most notable backer is JD.com, an e-commerce firm based in China.
Farfetch was founded by its current chief executive José Neves. Its prospectus says that Neves started the firm seeking to use technology and innovation to redefine how fashion is bought and sold. The CEO will have a controlling stake through his Class B shares that carry 20 votes each. Class A shares will have one voting right per share.
Farfetch, like many businesses in the United Kingdom, fears that the country’s decision to exit European Union could be a huge risk to its operations. Talks between the UK and EU are currently happening, but it remains unclear how long the will last.
“Lack of clarity about future U.K. laws and regulations, including financial laws and regulations, tax and free trade agreements, immigration laws and employment laws, could increase costs, depress economic activity, impair our ability to attract and retain qualified personnel. There is significant uncertainty about our future ability to employ EU nationals,” says the filing.
Sources
https://www.sec.gov/Archives/edgar/data/1740915/000119312518252315/d532260df1.htm
