Why Farfetch Shares Are Tumbling Today

Farfetch Ltd FTCH shares are trading lower by around 40% after the company reported Q2 FY23 results.

Q2 sales fell 1.3% Y/Y (-2.1% Y/Y constant currencies) to $572.09 million, missing the consensus of $649.17 million.

Revenue declined by 42.2% in Brand Platform to $67.4 million and 15.1% in In-Store to $22.7 million, while Digital Platform revenues were up 10.5% Y/Y to $482.0 million. 

Gross merchandise value (GMV) rose 1.2% Y/Y (+0.8% Y/Y in constant currency) at $1.03 billion. 

Digital platform GMV rose 6.9% Y/Y (+6.6% Y/Y in constant currencies) to $944.3 million, while Brand Platform GMV fell 40.8% Y/Y (-41.9% Y/Y in constant currencies) to $63.4 million in Q2.

Adjusted EPS loss of $(0.21) beat the analyst consensus loss of $(0.42). 

The company held $453.8 million in cash and equivalents as of June 30, 2023.

"I'm pleased with our second quarter performance, which demonstrates our progress towards delivering profitable growth and positive free cash flow in 2023. Our Digital Platform has performed particularly well, returning to growth while maintaining a stable order contribution margin. This, coupled with significant savings in the cost base across all areas of the business, means our digital platform is more profitable than last year. We enter the second half well positioned to achieve faster levels of growth, with a lower cost base and strong liquidity," said Elliot Jordan, Chief Financial Officer.

2023 Outlook: Farfetch lowered the outlook for GMV to around $4.4 billion (from $4.9 billion), with a Digital Platform GMV to approximately $3.85 billion (from $4.2 billion) and Brand Platform GMV to about $0.45 billion (from $0.6 billion), and an adjusted EBITDA margin to 1% (from 1% to 3%).

This month, the company disclosed the appointment of Tim Stone as Chief Financial Officer, replacing Elliot Jordan, effective September 1, 2023.

Price Action: FTCH shares are down 41.81% at $2.77 premarket on the last check Friday.