FTCH - Earnings call transcript Q4 2020

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Operator

Good afternoon. My name is James, and I will be your conference operator today. At this time, I would like to welcome everyone to Farfetch Fourth Quarter and Full Year 2020 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator to Investor call Relations. like Ryder, to VP of turn now over the Alice I’d Ms. Ryder, may you begin your conference.

Alice Ryder

Hello. and full Farfetch’s fourth conference to And call. year welcome XXXX quarter

to Officer; Elliot our Neves, today Joining Phair, are also Officer Jordan, our Officer. our and Executive Chairman Chief Chief José Customer me Chief our discuss and Founder, Stephanie Financial results

statements, could today. Before them. and expectations in include forward-looking will our discussions we begin, today today indicated made we statements as or no those would Actual forward-looking like to differ results speak to the our revise from publicly update forward-looking remind We you that to obligation materially statements. only undertake of

For the Exhibit XX.X cause the XX, of XX, Factors a factors section SEC in of to SEC risk XXXX, Form April and the important that actual filed XX-F filed on Risk discussion our could X-K with on March with of differ, some to the results please Form our XXXX. see

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at like reconciliations these call which measures and And to non-IFRS financial to IFRS press the earnings our our I’d the José. in slide can of on website available presentation, now, both the You are to financial of turn measures find farfetchinvestors.com. over release

José Neves

as the mission display could you and a demand operate on Thank our exponentially significant online was XXXX. the than brilliant of advanced more enable boutiques their successfully physical through today. XXXX executing you, chapter also of and which operations moved as tremendous customer so during designers we from joining XXXX to not for and our many perseverance with And the Farfetch source and of height capabilities, when through This revenue, thank Alice, and throughout particularly lockdown significant relied our our shops Farfetchers. utmost values was with on Farfetch and a us all luxury the leads did year initiatives, reverse industry. in

for global beyond, impeccably, so, online to $X profitability first offline, we on executed back industry, for system our entire our as the over and of extending where our fashion. in we'll billion full teams cementing position largest the XXXX to adjusted milestone largest towards quarter first to look enabler doing with are progress nearly the achieved ended our $X year new grow opportunity. of on online focused our further our Group build vision both and quarter fourth GMP operating as strong on billion luxury is In crucial an digital attracting be we As GMV customers XXXX, billion XX% with quarter laser global $XXX and cohort a we our the EBTIDA. a year destination This luxury of positive and

Richemont after giants transformational platforms abilities, we During Alibaba, the a industry our with retail retail also in quarter, for Artemis our vision partnership with to go and expertise leveraging technology. in luxury Farfetch’s of collective luxury combination new shared announced and by

creators, curators on the mission connecting strategy. consumers. we our chapter our platform As than and we enter strategic are two roadmap to determined we our for major more focusing to themes across ever And are be global five execute of luxury XXXX

LNR, to from we platform with our Luxury offer e-com global we partnerships what we experience channel, three, with to preferred which platform multi-brand being And Not What our luxury the landscape, brands our operating looking see and two, the three Retail, but now. across nice-to-have offering innovation inflation which to unrivaled New fashion, partner. number Farfetch luxury customer The are strengthening shift paradigm priority. brands are are first the attitudes fascinate advancing China luxury global by their of uniquely LNR need moving Farfetch is is positioned brand Starting be a continuing partnerships. mode one, are the strategic one digital continuing the with is brands five to four, right only of only [Indiscernible] revolutionary

our on marketplace than their XXX by our grew XX% they XX partners remained participation three increased QX. lasting the XXX% top in retention the fact, brand with partners listings stock their partners as top In And past more e-concession have over brand years.

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Turning China. to

expected of luxury China five market than the luxury and Over is Mainland represent next more spend. to largest the become billion years, $XXX

them is language such localized and commerce payment website local luxury via who position in preferred Chinese of valuable to social of their supporting in shop from channels our WeChat, attuned local supply their the customers brands their well a China operations to enabling by global for as a our fashion attract best styles. upto stylist us private native clients Our X,XXX to via and methods app,

the companies the business in As Western China in grown only that GMV again a driver who fact a e-commerce are of China. Mainland succeeding be having to a XXXX. marketplace growth is of second and our our This overall continued faster the result, market one is are for has few than largest we global marketplace, evidenced by

another our and operational excellence. demonstration technological is Additionally, of

fifth have Luxury launched ahead to of Tmall Farfetch or the delighted on schedule. Pavilion, are on a dedicated We of in TLP February, soft storefront

a not on significantly the soft brands, of previously more products expands have available presence channel. Of we the selection launch Our on XX% already made plus luxury XXXX has the Tmall. than these

fashion able shoppers favorite As believe are of travel as to to the multi-channels, a app, selection at unable such the broader shop online or luxury TLP. a to their time now Farfetch luxury the consumers luxury and destination, repatriate their are they will we when to personally increasingly Tmall’s shopping result, these

resources overall lean the promote apps first in the across official business brand and brand behind our well March, of which of this believe time deploying where will XXX growth of luxury brand Tmall’s in a one, will more widely to the we From In platform address audience on the we conducted XX which those expanding continue as we most more been we digitized. over XXXX, is marketplace time And up would recognized past of we launch million significant our as retail We including to until add the have will market to marketplace. we is storefront branded driver to the Farfetch sites, brands at consumers. as as in our Farfetch awareness out to marketing Channel, the to our channels, China invest the is and the the our building in all broader invest awareness in envisioned as as we than TLP industry. needs years, key luxury luxury day platform the industry. and the of well the vision. On for set luxury new a be increasingly capabilities platform for begin to become industry,

XXXX Our are offline have future channels. of our And star out overall building of closet since vision encompasses been suite. we also FPS the which now luxury the part capabilities,

on its then, LNR luxury global continue This have the launched pandemic. Since because the of enterprise technologies these department store will throughout leverage needs time fueling our client. We our our harrods.com of Harrods, instrumental iconic largest capabilities serving been clientele FPS. businesses strategy to address year, in luxury the to last into we enabling

enables systems expand solution would continued a also exciting, our as have believe, new unique FPS' our department e-concessions capability and to set private plug clients. and We and brand of I to stock This highlight service. solution e-tailers places. One for directly become launch is to into we enterprise like effectively recent stores

Our now on meaningful future over to is powering of delivering a the on lift harrods.com. Burberry's Burberry's first indicate couple that months results implementation e-concession harrods.com, performance the is and the initial

digital try enterprise and the today brand, Richemont the digital powers grade industry category also for the nearly relevance the start operating This billion Our retail, Artemis luxury via to enterprise belief of and the for industry Clearly, and a entire this $XXX Farfetch we is not is Alibaba, market, luxury deliver to the by channels, and have to our my positioned prestigious luxury, platform to entire the address digital journey. to But partners, most new industry some are only vision industry. we from are we reinforces unique enable offline spectacular luxury its and and division. luxury proposition that enablers but endorsed Farfetch Harrods, innovation tremendously about are will online go that retail our excited the of reaction the the global after CHANEL of strategies system the we the new luxury luxury at vision. largest to from in getting of squarely

BXB our We start in our will enterprise organizational increased continue brand efforts pursue also in invest with sales technology, culture. investing and and to therefore,

for have of profitability XXXX, remain initiatives. full achieving also we While profitability these fund our anticipated the growth to year committed of earmarked portion to a we

passing like update around ESG. work Stephanie, important we Before are the to doing you I'd on to

vision positively the each industry, to initiative way. business In platform of deliveries significant returns. than we of be a progress have April committing Since all change more Our importance our highlighted programs integrates in that Farfetch global further a throughout using a to sustainable the XXXX, multitude year our five we positively across of been made of and the in positive pillars. carbon across Farfetch offsetting an enabler XXXX, our ever,

sustainable products. increase significantly of We also our offering

the now site driving. outline marketplace, other Group added, with through is at visit aspirations, brands our of more conscious I'll which our invite changes pillars, Stephanie? platform about represents ESG goals. Black These and Our you key two on in everyone to walk published and positive for few importantly experience. than just GMV. brand I now highlights XX% some such drive the helped our let tab from unrivalled for on a X% clear on to access longer-term edit, the through as we to XX would XXXX Investor you our examples we're And designer these Stephanie farfetchinvestors.com the learn XXXX global customer products are and marketplace. which our an infographic XXXX a more in made growth Relations GMV which our platform of one initiatives

Stephanie Phair

two organization. pillar on you, our a give great with Hello, efforts overview you to and redouble centric first. you everyone. we build chapter brand stop of all speak our our Thank as customer initiatives today José. touch of To truly whist It's a to

we It was brand full and As XXXX. communicating a building The unique, everything José awareness helps do. brand an the what our they campaign and there's brands our hours funnel what alike. and by incredible brand emotional new consumers do. say summarized, have luxury as But had still in was I and to says for we year transformed and campaign. brand our who with an more a done It are could on an we Farfetch marketing Farfetch words. pivotal XXXX. as drive connection introduced spend makes image we on to And focused much we greater brand launched identity XXXX image for love so customer

So IR I'd Farfetch we've you video made like invite view to a investors.com. site available at on our to

the brand We and destination loved be in customers to and have for when most first they inspired last to shopped the luxury, or go ambition be to the luxury. want

to invest such, positioning. our initiatives As in our in unique cement awareness to brand and XXXX, we intend bolster

brands. on-going April on Some an include; in by differentiate to our in U.K. our campaign going leveraging with in our playing collection. who Homeware of of Middle Only to Armani Dolce to choice factory brand to seeing to Elbaz's & Chopard second season for we unique concepts, on Gabbana the strategy the of the other luxury of And who and the while East Gucci, in Richemont's their Burberry brands the marketing as examples launch platform AZ NGG and the one our in and our of reach show support partners live of unveil we in XXXX their their made the new audience This U.S., like focus these China, brand capabilities brands to These deploying recognize targeted Farfetch targeted concept have partnerships initiatives our our new successes stream their sales cities strengths, addition proposition TV. Men's delivering effort executed innovation among to our with channels follows also on boutique own fine Farfetch and our capabilities holiday Farfetch XXXX, XXXX Imaginary Alber all features. in global our are from with acquisition and also jewelry Off-White's partnerships their grow but with live hosted already offer exclusive and

TikTok. We such sustainably to customer the global we proxy an most continue And full aim leveraging pillar. owned we channels, integrated efforts acquisition create display By this valuable will in effective and and new our experience, by private focus and fifth to to Snapchat, capabilities, which efforts do continue most between downloads, marketing a between segment, social retention. strategic in we unrivaled driving ones adopting as Starting to TV, with business. in channels, affiliates, build search balance our customer, serves more most help CRM our love, thinking invest delivering funnel and on while to clients, brand engaged app who programmatic for and data referenced to cost as our existing customer us and our paid demanding across efficiency and the drive way streamline an channels paid and unique our

and technology virtual will accelerated COVID, Here of into as styling to enabled events appointments. and by such by ways we lean continue livestream new shopping

even XXXX. lower cost in we they our new continue importantly, are. concierge We and wherever Cities fantastic providing proposition. or provides secures unique you $XXX,XXX. any Global service almost will which with much to stylists scale build our fashion and demand, items the might earlier on $X acquisition. to our customer not, retention year-on-year more team, we which sells regularly a our differentiator brand overall love And and who a more, on occasion, item in XX million acquired The a spans continue on of service team XXXX, In sale Farfetch above remember personalized And to X value customers at invest in million tool whether by

efficiently market in Our tech and years sets over nimbly to marketing search and wide volumes year. throughout invest data enabled our the and shifted us as investment demand the

is do XXXX of app more year XX% these luxury continue for While shopping a where we survey, of This our through state our online. our that and CRM particularly polled downloads, and program. of or context increased retaining customer to most the lean will loyalty access personalization, into acquisition, efforts, customers is in updated customers they their

the fashion launch to and customers new the full with So to In is opportunities compelling will there. tech Farfetch as the crossover customer, pre-order is expansion the $XXX lovers. only value billion immersive laying the ways also fashion between earlier. products the clearly and offer, to by beauty am appeal window be ourselves to more customer of we we introduce foundations nearly and excited consumer I and industry. XXXX. offering In a an the making of partners. orienting for growing to luxury very shopping. the newness our XX% beauty new an announce customer, you relevant experience to and one audience our personal journey inspirational, the that closer We way, opportunity even our brought of XXXX, goods mentioned has in represents towards Farfetch fastest delivering along this been on even to and XXXX, the the launching on selling framework will future of in of the growth luxury What for categories UD category for way means we through create intend price existing continue the our I the to customer the pre-owned our showing marketplace for approximately and looking extend

now and leveraging of model and results And business for over And outlook. capabilities features category. from hand a discuss their benefit our to products to to launch Elliot model Farfetch margins point as the brands from and call in by that on our e-concession view such I'll Secondly, the makeup now entails. offer finally trials to our higher the financial virtual innovation beauty

Elliot Jordan

the the for results hello to you with I first milestone about the firstly everyone. important particular in you sharing financial level be also quarter. profitability group, in which EBITDA of GMV am achieving $X QX, was latest of adjusted Stephanie billion and at Farfetch pleased Thank our time the

head acceleration we have of in contribution margin our remarkable platform increasing growth to year-on-year, close $XXX brand growth positive XXX XX% digital contribution delivered ago. or a in gross was platform a of XXXX growing digital quarter. XXXX by financial year billion percentage of costs XXX expectation Group year points quarter operations lower minus GMV against with by growth operating platform initial of strong the by of in the of call, performance The basis outlined Expansion XX.X%. of to adjusted million a the adjusted to on order XXXX. $X.X points of adjusted Digital million XX% year basis year-on-year. G&A over last of margin positive in year-on-year A This minus of Group a $XX an platform as XXX negative the fourth ahead billion. of basis and million percentage to XX% GMV year-on-year points. are costs completes cash expectation. We across adjusted $XX from the of EBITDA million We increase $X.X with you reserves positive from revenue GMV full our growth XXXX, XX% the revenue points and expenses, position XX% XX% $XXX operating as achieved And cash reduction million in of And year-on-year. $XX year-on-year from by margin technology our basis Total flow one with versus million XXX cash $XXX flow points we year. of basis XXX operation EBITDA

and digital platform year-on-year, brand party solutions, sales Farfetch starting to the at by growth a $XXX on e-concession platform, segments XX% Within in more grew Looking year-on-year and GMV of million. GMV this XX%, grew third which QX marketplace. doubling with business than by by led

of decrease revenue. proportion year-on-year media slight of due solutions margin and rate third The take increased a to mix larger higher party a XX.X%, SPS was the

prior per costs in of share GMV. party a filming XX% the returns free represents shipping our year margins of business our GMV at impact reflecting XX% higher third Third year-on-year free XX% of order direct-to-consumer GMV and first were party by original versus quarter, gross on proposition our the focusing party from proposition. XX% and grew supported

ever higher efficiencies a luxury due highest which revenue were gross efficiently fashion in Farfetch of growing Digital driven new channels. retention the by leveraging XXX our also than first spend, for we paid payback original XXXX the margin off increasing and from cost by The platform cohort to on from the dipped generation our XX% three QX XX% with and with despite while strong margins channels to app year-on-year marketplace XX% year-on-year expanded in demand These full sales up to maintained higher QX order and across contribution six digital customers paid points customer platform party paying to adoption party services XX% price work XX% XXXX of offering. achieved non-pay lower within of First is quarter, quarters. space. XXXX. months, month the acquisition at spend of XX media growth of basis XX% and now High efficiencies over lower lifetime customer acquired XXXX in data QX and XXX,XXX reduced to costs the GMV cohort year-on-year the previous value QX on mix

XXXX XXXX. sales helped in fewer sellers economic on marketplace focus full This promo the to to continue for QX on We with better across price drive as platform. the compared days

platform wholesale Off-white And $XXX. resulted option, The brand lower with due locations. million slightly collection. to margin. at was which average in the opening stores value year-on-year but direct-to-consumer average of GMV revenue expectations and we XX% year-on-year spring fewer XX for Angels has a XX% outperformed of at a basket, within profit gross items prices, in result, per marketplace drove grew strong store summer As million due key a $XX revenue selling higher gross particularly to $XXX in demand the of relatively a This Palm order

as pandemic expected, due were down like-for-like to However, closures. XX% sales approximately store year-on-year related

we million. has supported QX costs, This QX. to able at which increase stable our in now demonstrates were platform to infrastructure, the and Turning GMV a are leverage operating quarter-on-quarter achieve our $XXX from XX% which between

the payments basis of QX to in our a XXXX, XXXX. delivered adjusted in a revenue QX XXX X.X% year-on-year depreciation One XX% the seen the Farfetch $XX increase QX at ever of revaluation translates This margin. is non-cash it $X.X a and that during we billion fair primarily in over venture Operating a to QX quarter. share due million, which point items percentage revaluing result, final value. based as with share we $X quarter this Farfetch important from place spend adjusted in is and reduction to joint It's was point our a representing adjusted per amortization EBITDA the can on in have a $XX in Farfetch’s the appreciation of be million, profitable This of EBITDA and additional in XX% As price Middle regarding $XXX note valuation, culminated as first million. of note to to held liability XX share XX note loss convertible $XXX settled shares. of result in million loss $XX East,

months, I guidance stated financial including outline for the previously adjusted the next margin over XX we wanted EBITDA a business, for longer delivering goals remind term. everyone the XX% about our to Before

We to infrastructure. this market expect platform share, economics unit further and expansion to delivering leverage continuing to significant the capturing by our achieve

with goals. these results XXXX line in demonstrate execution Now

of And As in X.X a share adjusted In out on a times X%. $X.X is deliver platform the billion billion, year XXXX, and to does EBITDA improved remains primarily to opportunity. has Adjusted doubling revenue longer to capture of minus XXXX. as we expect our priority, into from grown minus full term for IPO the platform. has GMV XX% market EBITDA due year margin investing XXXX positive gaining to higher since digital result, our the from GMV to $X.X adjusted

platform offer luxury both China enterprise for as functionality focus investment and for brand audience platform Farfetch increase and large particularly new as and destination key vision. is technology a we retail beauty, supporting building demand the Globally, and be As in to invest our invest deliver brand brand market. we functionality, generation to luxury to such, ensure TLP will awareness, in fashion categories level new in look additional will to our our the also such continue this

costs pressure We first gross anticipating services term as of party direct are of U.K. margin the higher in growth all order additional leverage contribution shipping continental stores, will see XX% short in Europe. opportunity digital are term. some our boutiques and taxes, XX% by department to XX%. margin. of European of this as our based put and first well More our the We Taking to which as which expand all to of two capacity, as impact equates result XXXX, withdrawal brands, begin year Farfetch including from for digital party on a Browns GMV consideration, longer we our expense actually warehouse support for over the Europe to XX%, on to European unit Union the European and fulfillment an to infrastructure we quarters, some targeting platform own year coming this also U.K. the diverting to into full of growth inventory planned

this be we expected front faster of growth We grow to is revenue a party as GMV in anticipate faster original growth digital little expect first to platform our than sales. weighted. Adjusted

digital to XX%. expect contribution of XX% platform order margin We

to X%. further be revenue, X% between are XX% of adjusted to XX% EBITDA costs result which margin operating expected will to Our an in of to expected leverage adjusted

contribution gross platform Looking at growth XX% margin to expect between head be step and a $XX million. QX to to XXXX, platform be GMV platform XXXX QX order at XX% XX%, XX%, up $XXX to of brand digital XX% of between minus revenue circa $XX slight margin, adjusted million EBITDA marginally digital to minus we $XX and at million million be year-on-year to to

you to now over back Turning José

José Neves

day the was we meaningfully principal this and own without day the for would the Being and driving brilliant, have of XXXX platform values for out. the unimaginable where summary, to sake and the business, this strategic expectations as industry. I and luxury all human, amazing In customers a exceeded Farfetchers. them Elliot. our achieved we [Indiscernible] encountered, landmark living of the serve. globally, our the despite of of through our efforts you fashion to working Thank initial creators, revolutionary accelerating growth, want industry and thinking our thank And love the consumers terms positioning been in challenges curators, of in dedicated year, scaling None and for

Looking forward, to chapter a Farfetch, opportunities the and of XXXX in many achievements to growth early for incredible phase of significant enter which will leveraging of year will the new of be a come. years drive chapter years one two

be We the the profitability $XXX enabling partnership are will remain we And Thank luxury platform, laser now their continue partnerships, opportunity have focused brand in folio our we helping these win long focused and pillars. Luxury platform to customer as and brands your we the retailers and main win gains of digitize new the industry. redeploy for on retail this global a nearly after for continued experience you. being businesses call to luxury and of from Whilst China, behind offline. vision we billion to fully the go this our global five open questions. online term two chapter to industry, for platform XXXX, spirit will some on growth

Operator

comes question your first Oliver line Our from with Cowen. Go is Chen line Instructions] ahead please, of [Operator the open.

Oliver Chen

on the that what in marketplace? underlying your you. for take Elliot you're guidance also the what's you're of terms promotional vaccination now, contribution what regarding environment seeing for expecting your seeing Hi, thank pathway you reopen Thank think just takes are environment happen you love and in stores the globally. you with as would QX, margin that may and do the what the hold

José Neves

the are increasing think toward the their Oliver. last What I'll Brands seeing take in encouraging. terms question. Hi, move market year your part is became of we're quite more We first of actually promotions e-concessions. disciplined.

less promotional. we be and where the promotions, this sales, to You've ago is e-concession strategy the the we that the and said brands half and clear model, seen a pioneered business would at is digits that the than full through, strategy see promotions, less e-concession drastically in In promotional you continue focus That full it XXXX other tend growing see could e-concession model we control well what's go. bigger and a in brands year And QX as that and on a our of less working much to we've they our case, clarification brand one pricing independently in which Obviously, days going triple price market, industry, Kering publicly and clearly coming we and to much, is is had had Moncler to model much in saying on fantastic is in of we even. the XXXX. really royalties, which validates example close is now mix for strategy. been accelerating in news in what fact and

hope stores all You obviously soon as as about asked that possible. happens reopening, we

I paradigm in This Bain is penetrated. up online McKinsey, fast, that shift very XX% industry. of a XXXX it's analysts sales And XX% what predict a luxury it very but years’ and this XXXX, today, And jumped to still number. to industry to grow under witnessing this other in time. to in still -- sales continue that were low we're few XX% think in a remains, an was is

a our capabilities fleet and for digital multi-brand, strategies our paradigm own the to in sustained And of incredibly elevate mono continue benefits brands and their very is therefore in start brand.com specializing number we'd is we're have we which only online see discovering as future. and need the positioned here the consumers brand, the also this seen sector shift for shopping, and priority. also of growth on to trend offline are the consumers solutions So and one will who to confident platform secular offering both we a the that of online

think all is Burberry, that's that to Harrods can moving industry can the really with all that vision brands been that of the retail these to for market a really new the products e-tailers reception involved. stores department as and bringing revolutionary quickly alike the has with that I benefit launched service parties So to and e-concessions we we're e-concession what spectacular including be needs of accelerate the to very industry luxury

Elliot Jordan

you. speaking hi, Oliver, And great to

So just second the just following up part. on

GMV out on bounced really side we've QX of on QX strong things. of I in mean, the particularly So outlook, position, the a

growth we're particularly order is underlying the XX. direct-to-consumer actually a SPS gross to first all participants bit seeing GMV help product an order savings growth, coming that through option of The particular and up on through on are contribution Summer on we're particular, So, on drive is as strong on really the marketplace. The we're strong, acceleration that achieve side growth, between product, as helping as so is price XX% always, mix in strong full year-on-year now party margins big obviously, of from to will which getting the first actually drive step to sales Angels QX is expecting good direct-to-consumer business our the getting Spring QX the to XX% gross in party Palm very the offering margins. marketplace original

of down app there. savings really of across number data costs as we're down a striving, different of cost use low our coming engagement attract the the keep So levels making cost channels, acquisition from We're to fantastic channels, customers drive also to of well. seeing to use within through more marketing and

lot much higher underlying we in flowing go up. And supply into shipping things. Obviously, global is because job we is there So possibly that with the seeing contribution a that an of is for But packaging I demand innovative pressure team seeing can, working the things are shipping. Tax a charges amazing will carriers, marketplace do some participants manage to with fair mitigate doing ourselves. on taking recently amount the pressure on pressure, across have solutions right of sort short us, European that, that's shipping do costs the routes growth and for our to direction. this of the though e-commerce of we're introduced also around as as term We of Digital are some some cost been working sorts We're sharing think and of margin on pressure that order and with be countries, those of putting Services there.

exit put lastly, from additional Union near challenges. some So earlier also challenges the has U.K. European order as cost but contribution pressure I caused term, that will And on the margin. operational some on then said

Europe, of the products a goods got As the U.K. here move U.K. between we've in for and lot BROWNS,

So out. that sold be to has

will a short little margin, that be on I gross be bit impact lived. think but there'll of

we're Solutions, that border the to the as challenges. U.K. Farfetch Europe that destined or less we're and and many not move product cross to QX into And that our for U.K. to out distant by roll that's and going our seeing also to online stores into Continental move means not boutiques to from to looking consumers. stores, actually department same move we that U.K. As beyond, other -- for U.K. are We're brands going

to and Europe brands changes we're means as less a for by fulfillment also regulation to an of the challenges. as U.K. boutiques us going border U.K. turning actually move to of opportunity that that do to roll terms in or to cross out we seeing that other many there actually move Continental bit and department that are Farfetch same Solutions the We're forward. we the from looking to stores, And So

in there turning as an regulation us into forward. we're actually terms move So of bit a the opportunity changes of we for

Operator

next our And with Eric please. question UBS. Sheridan ahead, of line comes Go the from

line open. Your is

Eric Sheridan

for much into initiative? quarters, guidance two it's two, would that interest critical Maybe soft terms that launch, in but year on full sense any so the the XX? as I know storefronts and look forward of contribution or you are the we the out And that to over initiative still on sort launch you should Thank earlier is the number market thought China, see questions. do soft in maybe what in the going baked I seeing think any you're early think of be we taking Thanks. just days, investors. things in of your elements towards number you I soft from launch Tmall. one. That's of than investments as learnings part of that of success so what

José Neves

Great mini Eric. to Farfetch entire we did and X,XXX means a to with exciting. brands exciting. Tmall's incredible integration NGG, very the to Early these and all achievement received very already with to brands launch. milestone majority, messages able that for from on for center, have site Farfetch, just on this million an that open Hi, very, were CEOs million Farfetch example, Marketplace not in XXX are presence think without available our question. any to week on industry. left address from their apps one the I think, XXX official is Tmall, investment, WeChat customers. they Thank They channel almost from XX% with includes but practically vast have are I single is the Farfetch going brands the platform I are of going the to not open be launch you. an they Tmall China our It's, That word these next With programs, right, now and what Chinese customers. soft customer. the move and without incredible any but through for

very channel we learn. as very, a It's exciting. where, any So channel, have to in other

to learn imagine. to and as the through generation demand you would have We how sophisticated utilize platforms are these extremely platform

Farfetch other we some that have data in will to Google but strength confident these to to the which our take longer mass majority them is app, time very fine apply we -- very, from China or So of we're or sales over vast the apply capabilities, our any WeChat that to on very from or same meaningful tune, capabilities our continues way will strength. grow impact term opportunity. be to platform And meanwhile the a this the Instagram

our So there. really fast channel main growth on what is

channel, a do is where overall the also so Chinese to and luxury as say. to China Alibaba to not platforms terms push going marketing that I in within yet the to this brand to external and funnel platforms of that, want customer awareness awareness to flocking Farfetch allocated investments is year channel of channel. Elliot is is really the of also think the for We both even traveling the terms the and because in said, online luxury In performance be

And is to that in capture so opportunity awareness market. an this brand we think unmissable

I therefore think as update baking terms are go of to we channel you learn with and elements along. those early that it's days guidance in going and continue into to we

Operator

question with next comes ahead, Our please. Anmuth Douglas JPMorgan. of Go the from line

Your open. line is

Unidentified Analyst

Doug. from Hey, two question. thanks us. for Two, Cory on the for It's

call for markets your that's shaping curious, XXXX. category thinking what And in to mentioned beauty just you the and a that First, on how launch. started you're in maybe seeing growth have then, reopen, earlier

to could see just Maybe have the So longer partners a any beauty opportunity about around specifics in that circle brand up. and or a that category hoping that you you term, bit timing, you. talk back the to lined you may Thank bit. launch

José Neves

that big first And of new category, beauties. Stephanie, Look, we very in the question. XXXX. exciting the to way talk launch Very a take I'll part then in going will are about Doug, that's macro Hi, shift can belief, I the is not here paradigm go we've new right? points, micro. is think, consumers of and really This with the both this We through stay. data seen to

we have class edge. the on So points, data a

think points strongest data I the the are data. cohort

as has behavior added, lifetime spent very clauses. showing from data, than six we said, you So incredible in QX customers very the value, and paid in cost therefore, now have, We QX repeat retention so in strong, QX, cohort the and have customers record. in QX, was QX, those over XX less the months, strong XXX,XXX is customers purchase lifetime XXX,XXX cohort customers, of higher we are it's for of know, customers previous XXX,XXX Those customers acquisition data the which as those the of been new than I behavior. is, customer QX which back for the values

under We customers XX% most surveys, or that also still conduct the shop another right? customers, recently, we picture, new more etcetera. at category of they their closings, shopping most stores, online cohorts So these one penetrated. just conducted or of macro look to openings, is And more on, either to independently of then is confirmed are actually going have of do very you this online, from now a

GMV the view, what but know, $XXX a ended state. beautiful in growth. plenty XX%, You say XXX of billion room X XXXX for year We billion smaller, let's probably it's which take, a give in number. is is There's billion steady or with

So that's X%. Right.

scratching a the this huge surface we're huge, here. is only So

access have such We to China even online markets lower. is penetration where as

So we're not all with the stores. at of concerned reopening the

brands their a to feet? healthy the to I and working help can great in smaller end, opportunity. a the drive support Because to we a and to we in the sector unhealthy back think How get small, industry. shops. primarily community their back, fact, customers great benefits boutiques back We're In smaller that. think from opportunity everyone It's on it's

Stephanie Phair

faster-growing particularly is said XX%, include We've And And your year seen for business beauty, which to has the last entire question. as that I'll comfortable it's tackle take on that well want performed category the we've categories. Cory. beauty beauty. the also more people one Doug. always during as Thanks of luxury-goods online. personal about especially this we but buying question are and a that billion Hi, Hi, $XXX

about truly full for way thinking think launching about that really while a category So we've we space. when unique lead this just we it we an to proposition a can end-to-end and launch you is a and want been adjacent and this not about believe in this in

the the crossover are user which unique So fashion about around immersive in beauty. the our is between earlier, taken this, was research is, we've us we've an points approach and on that to in which extensive Farfetch, that around what is one And as I beauty things selling is a other mentioned customers way, Only proposition around words, Farfetch and framework what that destination. of done research will means come unique

that Our Gen customers want and Z look. for they shop tell us to

in and proposition beauty. and we present journey how to investment content is So our want around in there customer

store reality. our the can in innovation, you one much bring merging the physical augmented lot there's and do and and around so the beauty and of with clearly a online USP that is second is think The experiences, about done happening around playing particularly physical space of beauty digital you be experiences how innovation on there if the

up beauty really the how latest we're out proposition which many innovations, been we've brands that in from very an platform, them work something have think and enabler industry to to technology been have not with a of a incredible the innovations to with able just and are plug able third then partners importantly, us been the partners, to to fashion currently but because have do the we into we've own technology business of But Farfetch their also we've beauty for enthusiasm a fashion there. standpoint also and play as industry. start-up we had well. partner all and speed what fashion huge following our I that's really And So from keeps from can

available And around so seeing are their of particular online but unique. believe really they're margins you business stores, as better in brands think partnering I about concessions and is -- with used this it's really in which beauty And Brands not our unique products. model department control that opportunity and Farfetch. e-concessions, it's very gives to them

had a the within enthusiasm lot young we've beauty established is So a of the incredibly from of conversation knows lot which important everyone also but for brands, beauty as brands, customers.

So developing we posted. multi-year this keep it's about but features and content incredibly excited a our platform, specific our you roadmap. into architecture, we're Beauty and will is investment It requires specific.

Operator

line the Singlehurst Sachs. Louise comes question next from with ahead Our of please. Go Goldman

Your open. line is

Louise Singlehurst

Three of much. I type thank And everyone. And seems industry the you just as if in good for online. preferred brands model the me chatter and considering there's well. very for to that e-tailers on e-concession Hi, some may, firstly, be increasing definitely about also questions been evening, dialogue

that of change local And Stephanie, thoughts question of also so the you on just on players the on in if particularly is to traditional big a of change little beauty, in, the the is also competitive bit do regions? view I might of model? And player global do think really to up on happen but a kind quite quick topic lots landscape may, from around there the e-concessions. a across there's that then leader, the for following And being follow the with wholesale Farfetch still a pool that,

like sounds surprises Or on then my saw with e-direct That would about to boutique maybe that for be in Just the changes at the us you I terms just can tell XXXX. question, may, And second super type say brand beauty in the this a multi purely anything the Is of brands? strategy? cohort if of point also the Any my may if that in that of arrangement? terms what you question, of average in obviously, lack a the just understand help you. I a of terms and changes have of everybody. you Elliott, age, to lot surprise there pieces. some the visibility the demographic, I of is in regional guidance, And uncertainty us given, then can wonder just and if a last breakdown But been exciting? may,

stickiness, and very about help You then wonder lot I customer margin, a there's Thank but you create. cohort they a much. us talked you can around profit returns, expectations anything if levels, about exclusion understand

José Neves

Stephanie Louise. I'll other the can take first question the and then two. take Hi,

and work seen think of other deals market I that's very difference how our because important how it's to clarify some that early the are work the really So days e-concessions there. in fundamental a you've

for of on and example, so -- Harrods a talk gave because and When from Burberry can as view to the to when service. So e-concession when the Harrods, Burberry products, -- Harrods I directly shipped brands e-concessions of Burberry that Burberry we connected drop numerous let's the Harrods integrations. access thousands thousands

centers. e-commerce have something it's Europe, or know, in actually in distribution XX probably right. took flagship build, Burberry more I So of fulfillment Japan, six us don't years U.S., Burberry, many, This is to in that we etc. Burberry centers stores,

dozens on every with It's a expanded we is sometimes And XXX right. switch this multiple now from single the is over e-concessions. supply suddenly Farfetch, have coming half meaningful and bridge brand. available see happens you So the integration, of of we it's that range on what directly because integrations

a what let's don't them, then others. e-concessions. I I call pseudo e-concession, the call don't is Now Maybe I call to what true know this

simply picking says, where season. the brands the me than I that names, better You're XXX at you're want to getting arrangements ship financial you a margin. every full the are SKUs will the which I

You ship what you don't sell. me back,

doesn't sale deal. consumers. all the -- This a return it's is change for the or at game this So

initializing. consumer same benefits by has the sees SKUs, margin having price a margin, and The over retailer higher So a XXX the still lower changes. brand nothing control

doesn't risk, that anything. change And advantageous to with fundamentally the in proposition absolutely different consumer think it the brand, where a it So it's to good could while terms is I of in this brands. for come we be not stock fair we feel is It but the for etc. and retailer.

So who I and a brands think across integration. range go with and brand all for not range one many exciting. of allocate Burberry their consumer brands win-win parts single dozens and integration today, like the you example, stores. and unique this can And move who use retailers the for retailers to be be stock revolutionary expands SKUs products say this the e-concessions because retailer sees for X,XXX the accelerate an their need to all that And can previously expanded very gives integration for department to and department take stores, this to This is access proposition available. doesn't of risks the and

top think -- I we of six know. So the ready brands e-concessions we're with XX% Took now model. a the years We are as of of of that millions we think do dollars e-concessions every very, have XXX and go, XX very investment platform have We all hundreds excited. us you us. technology on to including top on our unique year, XX,

one. And developments I'll exciting we as so especially see that to baton pass very on the this beauty in but including

Stephanie Phair

Hi Nice speak Louise. Yes. to again.

to react are indie the as question your we're brands. mainly large having the with the done do again, product nimble done e-concession brands, similar offer But with and market, Jason, around with demands. and able operate the two beauty. customer have So compliment to that planning that beauty. also about the we've main really conversations to to key ones a on have the and the And be it Yes, might really idea unique the and And fashion think how some idea of on is business, as we XP is about to the with one we those fashion, a rounds. opportunities original to we're be

and, about way and from acquired it we can has label, enable million for been enable an X it's your good in XXXX that the multi, second really So an thinking four of year customers, it that can similar incredible a multi customers. we the acquisition. new we're new about in industry. interesting. from we've But brands, quarter respect. terms about new really in so industry response nearly is really, really customer been in way think a we XXX,XXX We've with question had customers, On And that

how coming to these platform. monitoring that to we've customer So can been imagine our cohorts, and and where try them closely keep they're And we them very you from. importantly, can understand retain

coming, you, them surveys, quite So are from pre-brand and finding people brand for a we're we've to And to for moving department points offline, And we're post done online. data from few interesting in new this, finding a of change think, I that few seeing industry they're stores. surveys, campaigns, example, campaign where to speaks online. we're are the the that structural

this quality brands. price. our on So what a proportion our seeing we're But rate. new strategy, customer, finding we earlier the this of found that and means And and is seen more supports line to also is two in the what we're focusing super same acquired in increase higher these customers And that vein, talked in purchase about price full a we've this requiring we're And full José that. which customers ended higher with to business. is

So and tier again, the what are quality mean rate. top better have those we a and absolute customers is customers higher of repurchase brands,

we've we've months, success in of lot accelerant. not were have only us But a pockets repatriation acquired where but we've only an have such spend, example, acquire are COVID with customers, really huge discovered where seen, so for then we've base also of retaining yields, lots we're Mexico, rates markets continue what months to for month, contributed and higher, XXXX. that, of new markets, has in to opportunity everything might of huge seen our of terms was six to new in this So we doing of you but re-purchased customers. we doing the and in as so as because and one seen XXXX, doing also customers, emerging XXXX success from three expect, customers And China

Elliot Jordan

obviously again, year Elliot think guidance, on Louise, XXXX Farfetch. then, And here, for exciting we is super

what goals the guidance really As is of you we've two lot a point out, focus on and is setting our parts there done in things. moving

share. year-on-year delivering the of the is those market to XX% the good are of levels And first at GMV ahead The opportunities. We is boxes. ensuring grow second obviously believe of growth, growth capture both ticks market and sustainable seizing and we we XX%

sort the digital overall on the same $X.XX marketplace growing at You saw of -- to the stepped our to marketplace via last up year deliver and billion $X.X set we initially we and out platform billion growth deliver the time. customers

we if last so into from nine head pointing worth be we'll opportunities, over QX, annualizing QX So of will it's obviously more think see as FPS so the those opposed as far. months chase we out, But incremental to the down. opportunities like-for-like launch growth Harrods, onwards I becomes especially

new on customers also an marketplace we the saw of We annualization that high from the have QX of onwards. very numbers

either I start last more acquired months. you, year skewing including we back going to see GMV year those from that's acquired said Obviously, to ahead. those way for I'm So annualize honest customers, year. will year, the customer we skew we skew customers, to toward XX new year I those the we growth growth XXXX to front-end be with are last going expecting this significant our and movement is not the be XX% for retention On the we the were from think seeing last toward any fairly as growth back totally returns, in growth we're customer And you'll XX% last retain base to as impacts neutral see previous in weighted first just then earlier we're on, toward think what quarter. customers those to growth at

drive to the what in the growth order seen So marketplace all year-on-year. it's GMV about terms on of we've

of rate. here. things of out take A In to terms couple point

includes take across third revenue the digital parties. platform from all all of the First all rate

the seeing On go year-on-year. marketplace we're commissions actually up

So despite up. e-concession going seen XXX% that actually XXX mix, We've some commissions the increasing brand participants at marketplace top same the of are underlying retention time.

grown that's start on. being So at through. end that's as But over the lower But months, actually, clearly seeing take XX the a day has flow we we've the seen of last FPS order created. rate to FPS value what XXX over we're drives last and last you increase because up matters focusing seen the that higher order in that quarter and it's contribution contribution ultimately year have points the basis are

good will this driving and order the through allowing and for improving gains, of X% result contribution, to cost leverage margins, base, invest in deliver So a sustainable the of guidance be year then China X% is to which market share to EBITDA growth, fixed the year into profitability. us the first platform brands, fantastic

Operator

last And we time for have one question.

Ed comes question final open. ahead, Go your Yruma KeyBanc Our of line is the Capital from from line Markets. please,

Edward Yruma

Hey, good guys. evening,

first, noticed China, to I just Will me. as plus strategy longer that, with guess reduce a going past segregate job you. a great then it the broader for I year forward? how really be demand ones generation, has Just a question, or reported is over versus Thank done the term? expense two sustainable that JV [technical difficulty] quick Farfetch on doing And the P&L what you will individually? on

Elliot Jordan

catch didn't Ed, your second actually. I question, quite

So back what was. to maybe can come we that

our as breaking short as still need On actually, I a app we the to No, reported other, have second quite JV, out repeat. your all we or it question, the new the missed Farfetch be platform digital that JVs channels. if China. all question GMV will and first Between be you won't or answer.

Edward Yruma

Yes, that's bigger picture the question.

expense? of guess, into you'll kind bit line? on job that great I levels? a little reducing shifted free back to Or going looking need levels a demand I done know of think XXXX at have you. in do Are forward? kind guys You you sustainable reinvest shipping? generation you these Thank

Elliot Jordan

here reductions -- there's generation. in two happening The yeah, demand that really are underlying driving things

space than have high to to got us terms organic cost data marketing else. our to reduce look focus that or will anybody use and allow us. conversion the fantastic know app data the marketing get luxury we've we've traffic. from is we direct of options And first via got telling retain away where them going here and also that shift with participants customers is and channels data search us wastage really engine through The built a sort that that because to more low team or now on that more And on we're channels use can able cost to the shop in in so customers of we really our moderate data engine be customers target of spend like toward

editorial an we'll around everything with in that that's us regard allow in GMV Stephanie to our customers that the many able investment will talking boutiques, And so our whereby then second from our engagement you on Farfetch significant the reduction us to to have brands, saw in quarter that to unique -- way customers, with to our demand speak the believe last opportunity moving is about the forward. over curation will customers particularly the that to only we engage on content and was XX% spend, the again, has we of saving QX. carry our that inherent in So be we the year-on-year generation brand and continue which have lower continue and to allow on a to app been that

Now, I lean asset think and want the into as opportunities. to leverage do China. do we new we touched We on want around to the

China, up, the of see some generation as contribution short redeploy we we over term push longer will expense come will that demand but back So down. we term order into

Alice Ryder

that of the I the the Well, think forward for on all quarterly months. good to joining updating Terrific. We to you brings a Thank next us. call. you in end us Have earnings night. look coming our call

Operator

today's call. conference This does conclude

now may disconnect. You

Farfetch (FTCHQ) 26 Feb 212020 Q4 Earnings call transcript