Digital marketplace Farfetch NASDAQ: FTCH stock has collapsed over (-75%) off its highs down to pandemic lows while revenue tripled since its IPO. The largest global luxury fashion e-commerce platform was a hot marketplace for sneakerheads and continues to drive double-digit top-line growth. The platform has over 3,000 designers and 750 boutiques and has acquired an average of 500,000 new active customers each quarter for the past two years. The Company grew general merchandise value (GMV) by 33% to $4.2 billion in fiscal 2021. Despite supply chain disruption and inflationary headwinds, the Company grew its margins by 100 bps to 47.1% by implementing a full-price strategy eliminating most of its markdowns and bolstering its premium brands. The luxury industry has been recovering from the pandemic and continues to prove its resiliency. Farfetch expects to grow its digital sales mix from 21% to 30% by 2025. Risk-tolerant investors seeking exposure in the luxury digital marketplace can look for opportunistic pullbacks in shares of Farfetch.
Q4 Fiscal 2021 Earnings Release
On Feb. 24, 2022, Farfetch released its fiscal fourth-quarter 2022 results for the quarter ending December 2021. The Company reported an adjusted earnings-per-share (EPS) loss of (-$0.03) excluding non-recurring items versus consensus analyst estimates for a loss of ($0.08), beating estimates by $0.05. Revenues rose 23.2% year-over-year (YOY) to $665.65 million, falling short of analyst estimates for $673.31 million. GMV rose 33% to $4.2 billion, and revenues grew 35% for 2021. Farfetch CEO Jose Neves commented, “As we enter a post-pandemic environment, I am proud of the support Farfetch has provided to our partners across the global luxury community during this unprecedented time as we advanced our mission to be the connector between the curators, creators, and consumers of the luxury fashion industry. Moreover, we are positioned to emerge stronger than ever, as an industry leader delivering strategic value to brand partners and an unmatched proposition for consumers. And the accelerated digitization of the luxury industry highlights the opportunity to leverage the unique capabilities of the Farfetch platform, to extend our track record of capturing market share while delivering further profitability.”
Fiscal Full-Year 2022 Outlook
Farfetch expects fiscal 2022 digital platform GMV growth of 28% to 32% YoY. Brand platform growth is expected between 20% to 25%. The adjusted EBITDA margin is expected between 1% to 2%.
Conference Call Takeaways
CEO Neves provided some financial metrics for the luxury brands as it expects the digital sales mix to grow from 22% to 30% by 2025. The Company has grown GMV 30% annually since its 2018 IPO. Farfetch achieved its first year of adjusted EBITDA profitability as it navigated a multitude of headwinds including digital service taxes, Brexit, inflation, supply chain, and IDFA amounting to 10s of millions of dollars in 2021. He expounded on the strategy to shift its business to a full-price sales strategy to help fuel 30% top-line growth. Half of the top 10 brands on its platform follow a full-price strategy, “In 2022, we expect to continue to deliver market share capturing digital platform GMV growth while executing on our strategy to continue driving a much larger full price mix towards an even healthier business.” The Company made significant strides for its platform expanding e-Concessions as a service module and announced plans for a junior venture with Clipper Logistics to galvanize its fulfillment solution. The Company has also made three small tech acquisitions to improve its platform with B2B expertise, higher-quality model images, and service technology.
FTCH Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provides a precise near-term view of the price action landscape for FTCH stock. The weekly rifle chart inverse pup breakdown was triggered after rejecting the $17.74 Fibonacci (fib) level. The weekly downtrend has a falling 5-period moving average (MA) resistance at $9.77 and a 15-period MA at $13.66. The weekly lower Bollinger Bands (BBs) sit at $1.37. The weekly stochastic has a mini inverse pup attempt at the 5-band, or it could cross back up towards the 20-band to retest the weekly 5-period MA. The weekly market structure low (MSL) buy signal triggers a breakout through $16.40. The daily rifle chart downtrend is stalling as the 5-period MA sits at $8.32 followed by the 15-period MA at $9.06. The daily stochastic stalled at the 30-band setting up a daily make or break for either a bearish inverse pup breakdown on the stochastic cross down or a bullish stochastic mini pup on a stochastic bounce. The daily lower BBs sits at $5.45. Risk-tolerant investors can watch for opportunistic pullback levels at the $5.94 fib, $5.40, $4.29 fib, $3.49, $2.52, and the $1.96 fib level. Upside trajectories range from the $11.46 fib level up to the $17.74 fib level.
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