FTCH - Earnings call transcript Q2 2021

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Operator

Good afternoon. My name is Erica and I will be your conference operator today. At this time, I would like to welcome everyone to the Farfetch Second Quarter2021 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. XXXX conference Farfetch’s second to And call. welcome quarter

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

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

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

certain addition, measures financial not refer reported call. will In accordance this IFRS we on to with in

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

José Neves

industry in a trend, pre-pandemic even levels. remarkable sales restrictions strong excess their on restrictions very us the given suggests Alice, industry. on which quarter with you is remain thank you, for I past brands brought demand, place COVID-XX laps the the enthused still in I luxury the very all luxury with fully Reflecting Overall, the speak year, many closures is which that in Thank secular delighted travel by seeing am by is reporting store to that more you joining and results and our am of first about to today. globally. QX, extraordinary the of the of pandemic. growth returning effects This the resilience

towards an greater with actively During wholesale overexposure pride also the their for the Farfetch markdown enable activity. including respect control pricing. And rebalance I to to or direct-to-consumer sales take the taken channel their to to online to over partnered curtailing, has past brands promotional industry the in opportunity that with migration channels DTC year, and fact the

tremendously two-year excited the period, Digital share Platform where I market increased capture XX%. am on our most by significant stack Finally, GMV by nearly relevant our

is reason our In key XX% customer two-year this important quarter where full of our is significant EBITDA forward fact, year-on-year the is at itself year-on-year, combination strength. have believe demonstrates of three-year markdown in generation a despite along shrink result growth adjusted on which reopening price reason marketplace higher a activity highlights we that in by our another full to stack going so demand incredible double us achieve will our Full This stronger celebrate. the the the future stores why a performance on prices this key more which digits this on grew targets with profitability, is increase cohorts quarter sales sales underlie growth, pace basis, XX% with and growth. which grown still efficient XX% our in to and business this physical and allowed price this The grew XXX%.

marked for grew past the well the more in three of QX anniversary back XX% strong the we than performance units also and New as acquisition. the our time across compared other QX quarters On XXXX. GMV exceeding the This by second year-on-year, second marketplace, of as group, as our Guards doubling the year billion to business $X

more the of brand spades. engagement Farfetch our content collabs increase in customers original drive significant One that I’m global the create succeeded organic of pleased the of had was transaction drive exclusive core to will ultimately, say to halo traffic. we the to behind a around pipeline and strategies effect brands, and and a

extends. is has Guards to marketplace Farfetch by of on XX become strong these platform top Guards New first with ever rate Palm driving GMV have continued Angels the of Dunk, Palm in evident Nike Angels also included momentum Angels brands behind to draw and growth [ph], with Ambush’s and elevating even brands Off-White and and going eyewear, capital Xs, no Off-White Moët Off-White collabs given Twang to growth Missoni demonstrating development. Chandon like brands the strength-to-strength little a from generating are brands Monster on champagne is the back New the & Nike that in similar categories collabs stage high Off-White at Recent of and bottle. to redesign collections Force Palm collabs customers propelled collabs expanding QX with is Air a of and The marketing producing. Gentle Lemonade brand they and a acceleration similar

full We to Palm ownership of in majority are the to brand have recently the in and company Angels our its entity. thrilled Angels have operating now interest Palm increased investment

Looking tremendous continued rent opportunity from XX and more plan brands Guards. We have collabs forward in to growth we than total see for New for XXXX.

experiences also expanding directly by as stores our or Retail new categories digitally into look brands continue beauty, to to Luxury on connecting with and enlarge our enhance capabilities. the distribution such further New We our Tmall by presences operated LNR shopping our will

be ratio, the Farfetch was to there wardrobe classics which of high first one to a New launch luxury from will to launch Born line including brands, jointly this later designed sustainable and plans there platform. women on brand one digital insights, and Farfetch called data offered grow for Guards We the view quality marketplace our many quarter. by initially more a created exclusively was have is price and also offering

on XX% prioritizing more share available than brand better. I’d promotions also progressing been execution the our e-concession XX take year-over-year relationships over years partnerships, expanded to last XXXX pleased with to ever led sales industry you reducing players pillars, over extremely which third-party than with saw has of period. like Top have brands strong the and more doubling price Finally, the units to same our all alignment and on our and stock strategic full well. two Starting I’m are

relationships have commercial insights. an valuable where we seen essential a provides to level strategic are as Our matured partner now who also

As hiatus now They that highest in solutions in luxury pure-play beginning to our their during the re-engage brands a of taking This achieve will which Stephanie QX, discuss to quarter objectives. to are more after translated our also media engaging advertising revenue has pandemic. into last in a are result, second opportunities into tap in audience detail. marketing

capabilities LNR continue among to to e-commerce additional on services. FPS existing to global partners and others customers large Moving multiple take have with to a logistics-as-a-service see FPS, LNR and we enterprise conversations continue spectrum and of broad on from

equipped have we our also We have made our in boutiques with Connected CHANEL Retail brands strategy, store our and cementing retail technologies. strides where already

purchase in solution, marketplace, Just our capabilities of our leverage implemented this Farfetch week, we marketplace expands we Retail Connected pilot exciting at wish themselves boutiques Farfetch app the a kicked purchases tenants. between Retail be for as Using have list able newest participating which product will or a in identify interface Farfetch own act and store our app and Farfetch functionalities. their also million their among plus be the on nearby community to pay for consumers app, our of trial Farfetch if off X notified licensed via our item to ground other platform will our world. store, when Farfetch is shopping an the our as an retailers available third-party the around consumers customer to

will benefiting more deliver deliver personalized a the base, able traffic from hand, will to app On use this are and with plans while in-store can retailers, be the to which to to we environment. service Farfetch our also this consumers to the is brands boutiques rolling to both remotely, to stores for even in other post-pandemic out flagship foot initially while Farfetch to connect more consumer crucial marketplace. last extend Farfetch luxury the incremental our consumers and interactive drive solution And we they have

China the we China, high GMV globally. media as to and China, fashion among drawn have drive and luxury growth to in marketplace. faster brands well performance The authority Farfetch as team strong QX, China our to has end see in as Moving built overall than to accelerated continued consumers continues partner grow in

online with in We our culturally signed their and such a Piana their market. in localized these few. relationship and on but for demonstrates that we’re channels, strengths these and And it was who capabilities not enhancing campaigns I have to offline. only growth be a will once our consumers unique very China This focused for with recently powerful relevant private to Harrods multiyear with on luxury as in marketing brands full markets. storefront and believe very content Loro Burberry vehicle quarter China experiences Farfetch be Pavilion, thrilled pleased And and creating early that the many we Tmall’s QX also partnership Luxury are and are achieved. marketing a brands, multiple first will engaged we TLP. expand communications also of DTC month-over-month by signs across we and the name with clients Armani crucial in have Beauty our CuriosityChina, powering unique again channel rating a have our strategy

luxury the our Tmall, engagement which We to exclusive improve These brands very brand XXX,XXX fanbase as of well as differentiated as platform across strategies. continue Farfetch customer are the and to on XX% Tmall TLP, our affinity our to merchandising building learnings Farfetch available strong Tmall of contributed have grew on for followers. to hone our on to range

consumers. continue remain very We luxury the demands serving about excited of Chinese shopping to

in I drive Our year, let continue believe the restrictions two arrival will China. remaining strategic particularly guidance, we brand of pillars. update will demand luxury repatriation Stephanie? light for which partnerships as recent and travel further decision now well, within which Stephanie of supply global indicates on another you may

Stephanie Phair

have you, put have you we initiatives, to towards progress experience I’m Thank both which our of Hello, the and focus everyone. on have sales. customer increasing we on made unrivaled José. supported pleased the price update full brand

approach driving emotional building connection initiatives Farfetch with involve loyalty. respect brand, an more traffic ultimately, organic our brand, First to the to and aimed at a holistic brand and

focusing two editorial strongly campaigns, on content journey years, integrating end-to-end rebranding Farfetch and ethos and past the throughout customer upgrading our delivering to our has on marketplace contributed the our and our objectives. our Over experience, brand brand

traffic, and believe direct, paid low channels, or visits cost London, of free into QX Dubai in uptick declined app Following brands April, U.K. brand second China markets, such campaign marketing our awareness, as tracker and in is in our Metro mix luxury year-over-year in a translating and referral. our notifications, QX of we this favor improvements York email cost Area, in survey U.S. with brand the funnel noted the lower And key as in New four particular full

customers acquiring new further on audience. Similar a shopped XXX,XXX have we customer we quality the indication a QX year’s Importantly, highly This an the cohort price. customers in But spend enhanced higher year are items QX buying more luxury attractive are increase XXXX, saw already to double-digit the our compared Farfetch in into the average of prior full to at per sales than we XXXX. from who price average this cohort. is of

engagement the pandemic. rates improve frequency in customer and to order addition, continue first increased retention for average year-on-year has since In year-on-year the strengthened, QX, time

the tiers rate in behind Farfetch has one first at share of is new in to month added the upgraded of indication loyalty wallet brand half gain, the Another of ACCESS attraction new the higher first XXXX. members ACCESS our the half customers program a to than improving XXXX,

we tire the we’ve on from efforts needs our as in increase seen our valuable base connections results mix to tier. shift grew faster qX, price own strong GMV mix they which with extends from the existing our their clients full we to increase delivered going our of evidences And As four channel ACCESS than awareness and brand a our retention the out as from clients, specifically Farfetch. seen higher have the clients quarters, private significantly In results, tier customers have past the other most mix lean each from unpaid marketplace private are to compared customers improvements of the with together private increased in in fashion showing into as GMV cost and low channels has among

audiences this on customer effort On campaign newness element bag engagement as experience room pillar. to our Olympia this access, the that another the customers, on engagement. relevant campaign Happy our Farfetch first-party innovative our and media not initiative Campaigns We compelling have initiatives, the more enhance the highly launches been launch In only additional measures, brand for attractive for audience, our are by window. to preorder also announce Donate, were innovative to counts Farfetch light partners to and build leverage The preorder seek to immersive featured believe as but from offering to of in market even implemented also and for signed all IDFA. fact who A only of featuring driving price virtual building as In deliver watch. data. more ACCESS fully brand selling continue AR early June, later extending brand our from drive their focus marketplace we to putting an our make we’re brand exclusive and an and Futures range media ultimately, content strategic strategy, technologies many the of price a full Burberry’s with As partnerships, our that global fitting revenue Many able generated ESG thrilled recently even by already which highlights full which very marketing launch role luxury with product channels brands open such be up they recorded an strategic which outcome we partnerships higher marketplace, our to experiences to more extend but experience positively audience our new U.S. privacy only to their with in our differentiated try-on our Farfetch our way, generate has also for critical and with proposition. including will brands I thredUP. key unrivaled to quarter brand helps partners, for increase component customers this launch month, of a content unique partner Sport targeted the campaign am on through pleased revenue to is Chopard’s the our have Imagined Gucci’s solutions on customer customers during conscious to Farfetch a that innovation, experience not and for partnerships ever our which quarter. audience, appreciate brands highest of their partnership highlighting focused XD solutions on brand and Farfetch will highly

believe financial of personalization, to around mix comm, twice in personalized efforts successful compared level increased share these ourselves, the encouraging are including ago, digital not That relevance on of been which hand outlook. call such they data. our from which only our it high drove As digital currently Not compared average we to we building a market we to platforms immune what said, headwinds. the trust changes, our have and over results policy are pleased impact a customers but and And to year standpoint higher their that to than are customers of from as willing the longer rate been to opt now, I’ll discuss our marketing a in with Elliot in by also suggests term, are to-date. that as a other businesses is QX see sales this have

Elliot Jordan

above adjusted ago in position achieving EBITDA adjusted of financial a well touch more of twice achieved XX% growth minus Thank two with full $XXX everyone. XXXX. and and $XX.X was for across revenue in basis deliver EBITDA XXXX, physical These XXXX. first and than in us is hello, XX% QX of billion, in our results of I’m to goal growth reporting our EBITDA minus QX thriving reopened, year. in be the margin quarter importantly, our demonstrate years increase you, performance XXX $X expectations, profitability GMV with as are million last points GMV, $XX.X an stores of stated line million in our strong GMV year of with have year-on-year second million to delighted a platform versus Stephanie, our adjusted

As been I’ve the years. the mentioned on of doubling two have previous every size earnings calls, we business

the strong Our particular, XX.X%. more are platform. has industry improving. our our digital third-party a with logistics and impact year-over-year is margins revenue business, and from margin of take In delivered outpaced which growth solutions increases Demand the the of growth costs, growth also in GMV wide have higher supported exception media shipping global generation from efficient within we revenue rate high in

final higher higher growing margin during a our And rates of and of position promotion The have first-party brand begun platform, our GMV back faster as mix quarter driving retail contribution sellers growth which in digital across six as of minus the We margin of markdown differential spring/summer compared year-over-year, price have across a and margins gross growth, and building maximizing margin This price price sales and collections new than on that we quarter, full of to weeks their from in lower on to full the X.X%, pronounced is of focused mix, X.X% up significantly campaigns. season a XXXX were actual particularly gross year-over-year. and as strong achieved the full an GMV stores minus significantly all means businesses. adjusted first-party FPS driven did of full has in markdown year-on-year have is the took the XX% terms step original want clients. This did was XX EBITDA driven our autumn/winter I last date their focus strategic on dive increased between performance of as the partners. physical levels improved a position, than anticipated, QX in I’m growth the GMV reopen. digital up this XX% growth level Marketplace, full pleased digital particularly the QX. is annualization promotional was by with platform makes the price of QX of as even in XX% and essentially particularly back XXXX, growing to have on lead and it which another the the QX Trade to platform strong performance the which of with the on same two-year and the at majority into basis. of up vast it Farfetch platform, GMV driving achieved

data In made terms more into our generation, pressure increasing become across capabilities The paid as drive have points space of services and help marketing percentage demand revenue. we spend of XXX previous platform a of basis cost competitive. of despite efficiency marketing the digital to editorial the impact tech having and has channels, as customer improve navigate generation investments relevant to demand our year-on-year highly engagement,

cohorts over within of the achieving with lifetime continue cohort. customer than XXXX ratio higher CAC We to value equivalent acquisition of XXXX payback see six months the a cohort new QX

The digital earlier leverages our other the Farfetch is major positively platform growth solutions modular growth and BXB for to business within is analyzing solutions, from SaaS of in FPS XXXX, platform bespoke to of digital XX% overall here the the QX. like-for-like in GMV new additions growth client digital which contributing deliver platform platform This enterprise partner clients. with GMV platform the

margin, to which on was profit due by concluding XX XX% margin is I points Before measures with a not and exit turn P&L XX.X%. the due our of duties at platform to XXX higher fulfillment revenue want to all increase from and increase over in XX% our versus the lower incremental the an segment, customers. This a parcel these shipping platform per increase up gross year-over-year, year-over-year Both in decided Union European basis grew reflected were part and additional logistics to of only cost digital points from slight was costs, XX% the digital in partners, the margin We cost in year-over-year onto revenue. to in to costs contribution rate, returns pass duties impacted down basis year-over-year U.K. order XX%

to holding our costs expect taken first-party facility and available Netherlands we costs these stock for to the shipping shifting the other growing headwinds in fulfillment globally U.K. across cross-border in business medium-term. from facilities of our and to While for distributed Farfetch mitigate In are our we have stock process return. action we further principal warehousing to the these into the third-party the particular, by qX, reduce continue and

to plans initiated with revenue begin digital some have within of we sharing the our tax addition, sellers. cost service of In

retail platform, $XX a of profit partners. million, at brand This revenue the segment New represents GMV versus a from increase to which year. Guards last delivered wholesale on our gross XX.X% year-on-year XX% Moving XX% strategic margin

substantially growth Revenue grew the with in our for favor of Guards year-on-year have business platform us distribution XXX% of New digital we channels. over third overall as direct-to-consumer shifted ahead in times in year. closures and higher for opening than to of segment throughout the the in-store QX was $XX New stores COVID-XX due Guards last store XXXX million, XXXX new brands X.X

increased revenue XXX% Excluding these openings in-store year-on-year.

growth Turning at compared of platform million share. scale delivered We services, particularly a we where our customer driven cost leverage drive of share delivered adjusted of totaled technology posted with to-date G&A the which to million, to value operating and of operating and on at been fair XX.X% continued of per base, profit items XX% minimal in incremental we $XX functions. gain means and costs platform leverage year-on-year, This and the in held the revenue, the have investments XXXX. costs, after-tax to our per our have by $XXX operations, technology $X.XX earnings corporate an has

which $X.XX part adjusted minus closed of share minus versus initiative as is in joint over was completed strategic of with was XXXX. EPS per our month last Luxury boosted November quarter our formation share We venture, of Liquidity strong we announced earlier liquidity billion. China $X the Retail as Our this New the year. $X.XX per

Alibaba the our of part each in As liquidity for the billion venture. invested this $XXX been formed at exchange would investment, quarter in proceeds newly each and million end. of transaction, Richemont Including $X.XX have XX.X% this joint

growth expect QX, to to we XX% be growth XX% platform. circa and the brand ahead circa in-store XX% to XXX% with overall year-on-year, in Looking GMV growth

acceleration sequential XXX% on basis. more expect Within year-over-year, represents a growth digital the than circa two-year we grow to which XX% to a platform, GMV

finally, margin contribution through growth XX% services to seen we strong platform and revenue expected full the And platform the between work XX% results year-on-year is circa headwinds to year adjusted as These continue step achieving are positive near-term Our our [ph]. of million to previously at XX% adjusted level. GMV digital X% $XX deliver X% of targets margin be year-to-date. stated a EBITDA digital order of expect we we’ve EBITDA to to towards

share We are and sustainable capture. delivering growth market José? on our strong long-term strategy of

José Neves

you, even Farfetch past already was luxury partner was close stronger for retailers I’m a both year am strong very the I historical really Thank fundamentals. to Elliot. back The as growth growth our result, a our to and with brands last to and in dynamics period, XX resilience and doubling impressed that in Moreover, going we GMV of that and unprecedented very half proud many always this delivering believe we sellers, reasons always positive be full forward, a now the flywheel to transitioning normality. Farfetch had with force. months. talked I the play about that industry in is

are fast growing Our unique XX doubling brands e-concessions brand their luxury top sales with year-on-year. the extremely

Retail of accelerating come. market own Thank effect more turn all partnerships of the many Operator XXX% our for layers strong in advances quarters growth years, year-on-year global Luxury open to gives the FPS, to now boost progress become of including and which this XX% stronger New is call attracting for Our elevated a and Connected creating to cohorts This ask Farfetch continued supply, with marketing two luxury, I’ll Retail. China, you. in for and Q&A. and the full is flywheel platform brand driving over price is in in sales

Operator

of line the from comes question first Anmuth JPMorgan. with Doug Your

Doug Anmuth

just for first ask the Great. Thanks want questions. about to taking Elliot, China.

I comment GMV had perhaps, think, you China accelerated. that

and if think regulation into impact store and acquisition just just TLP how majority any there there? and increased did around the falling Also the José, around Off-White making curious more LVMH then at thinking share Thanks. you in impact XXX% company? that about to question to you’re seeing details Palm with improvements Angels in just perhaps the by one driven So around or that going ownership progress how for might monthly you’re any to that’s and hoping some is China? play the that have thoughts curious operating Just your

José Neves

Doug. Hi,

I both take I’ll questions think actually.

Doug Anmuth

Okay.

José Neves

built than to with marketplace. with really, wouldn’t It’s America growth that the Starting we both pleased growing faster our and of in by vast China I very, and the grow China. of car has layer new now that’s have which the the on very our continues is we’re of call And driven app finance, Tmall. performance the this accelerated business, really business, The majority we fast. in top in still CPS, the course, were business a of China is that business

app a limited, tremendous very on I to another guidance at it’s and opportunity international a is think -- tremendous be their restricted year that So And opportunity channel. we’re our travel going the growing be least. very where government both for fast continues very probably issued on has to

within repatriation to continuous that’s So a of drive going spent luxury China.

we’re uniquely I think positioned.

gateway digital of will We’re probably company that enable many, the a really market Western the partnerships being to luxury to to many And way. infrastructure, only brands penetrate with China for channels the the be in in continue the fact, and China the importance. great multiple to team, industry the I think, role of

Off-White, fact. performance news and those following in China Tmall think strong acquisition, very all so on great -- I channels, second on So And so news the very, very in is your of, question. bullish LVMH the and terms

Palm with community massive Virgil invite to message from creative have and that’s end wear, incredible home team, for started all, from case another the Virgil now brands. goes case by and great It men’s like other there the available to NGG the great and to congrats you on that brand at the Francesco was scratch example we scratch, touched look and up same of expanded to talent women supportive Angels the with we trajectory, several kids, Andrea brand. brands. with I right? expanded we expansion brand that for beauty on a build can with the zero, for same mean, this platform this a eyewear NGG team Ragazzi appliance the we Off-White. of from very first brand think, patterns is built in huge from the is platform fact and created track that of the If right? I that fantastic very, number, strength-to-strength brand, a then as Off-White that same approval is of And we’re and a out a with the again, wear, really we’ve wear is seen this that So

we’re We on course, by new a other well so creating one, fantastic, brands seeing, and was portfolio be growing that native is this will So fast new very Farfetch brand NGG. so just brand a there of only as full of created in brand. the and Farfetch digital we’re announced NGG

actually the with our So, the to an a in LVMH. that’s of of positive message creative relationships community and really terms of chance deepening

ties many with so have LVMH. We great

to brands with such We And losses as well, have e-concession extremely they China many within -- maximum of clients, [inaudible] well. opportunities with these with as CuriosityChina collaboration our events on now doing FPS type very strong see audience brands right, the for that in we the of operating brands have have digital is are these more because of component, generation digital millennial how proficient a it.

anniversary. two think NGG we it’s So years

bringing So it’s the big reason acquisition to is to celebrate the group. a it’s and contributions this

Operator

Your next question Oliver Chen is from the line Cowen. of with

Oliver Chen

as look you GMV addressable that and FPS on on? on catalyst end in on in And to out what’s and Hi, current Thank you of you came help solution, in and came your José. would your also On could you’re with focused I things of guidance? was regions what’s guidance your Luxury, of the about strategies, attracted thoughts that it the terms total ahead the mentioned relative range, if pipeline us there? I XQ you market merchandise learnings with the there terms ahead then, it you. lower the how and Pavilion Elliott, also mind brief think Farfetch Tmall, for platforms are how that growth but love at

José Neves

Yeah.

We Very of customer XX% the XX% Tmall, seeing. very on current very XXX,XXX our with Tmall strong and -- we engagement. compelling the of over on platform. it’s to That exclusive exciting platform. store. differentiated have offering, Returning brands what terms Tmall now is X,XXX Farfetch fans a are have on that by on In Tmall, for we very offering that those of very, over presence have Chinese

sales Tmall. on we fact ranking list XX that not of brands very In on top high seeing are on on terms are the Farfetch our in many

caterpillar seeing X, the fashion be then X with app, tend the we Tier lower -- -- Tier very these more not city a but and when lower luxury ARV, app. in to are they also customers fashion on are the success actually the so of Tmall lower so demographic, customers So on slightly customers our complimentary we needs Farfetch slightly this customers, much are customer, ARV are enthusiasts obviously, actually, really own

platform keep So obviously. meetings, driven that’s is the we algorithms, know, curve We platform, terms in by Tmall a and on said also advertising of strategy it’s this and also. and really and learning, learning driving so our a if you advertised merchandise always

material Alibaba as So are, we a be And contributing a pleased curve will and is these. XXXX all growth leaders we we to build beyond very our very of continue learning will this we’re very those the to said, confident as China and strong in and Farfetch channel pleased, on it’s the for it’s and performance well are with already territory. in

around your FPS. second So question

I is tremendous think it opportunity.

is can FPS are and end-to-end enable and luxury ecommerce about only solutions the brand not is we FPS ecommerce We BXB, of and the services. call retail. luxury suite these that grow fact, In

to global e-concession-as-a-service, from logistics, So ecommerce end-to-end fulfillment-as-a-service. it goes

of a components number here. there’s So

We’re discussing we’re -- conversations accelerating enterprise clients. multiple with

CHANEL’s our for going the these and clients enterprise can a are we’re are timing finding bit. -- not think imagine, these as I begin have companies ideal CapEx and these cycles sentiment, little of COVID-XX was multi-billion sales you dollar a to impacting re-platform and customers type closer long business, conversations business and customers has to accelerate,

that I’m and us to with normality. growing now faster customers Microsoft. conversations are that they to transitioning than business FPS are with the use also I services of But their see me think stress existing going let that us have. multiple expanding the on the is acceleration industry we’re we an the confident

FPS from So That of very, competition. we growth from to have customers, the will and globally. expansion them is course, of pipeline existing growth micro we’re for the very overall enabling partly brand, contribute of both from the above and services of powerful

Elliot Jordan

And Oliver, hi.

two-year we’re Obviously, if with back basis, it’s important that to we Just absolutely position look at are the where I quarter. the we think on the versus for growth on delighted achieve. we Particularly XXXX. our growth GMV look to the

delivered digital pandemic. very is the to we up of obviously, they versus overall, terms GMV of impact QX, in XXXX. on rates two-year in two-year of the similar that some start And growth than So the platform double normalize more XX% to basis, the the and business

In six strong the we markdown, was very delivering expecting. the last previously we we terms on what which that effectively as much very, were of within, throughout, didn’t marketplace, quarter, the saw in was sale growth weeks of see as

our a two-year as we result, we was being I sale. when going mix depth price up full result and of that year-on-year clearance a sales our see the as full standard suppliers XX% levels and sales of dramatically usual as the quarter very on So seen. an quarter breadth actually, spring/summer element X-X marketplace price in a It And sort you’d markdown XXX% on didn’t that previously to into because actually depth of end of markdown of gave, the activity factoring full had price And were a of of just expect, breadth full the as sale, similar in we season sort stack. price increase a were percent and fall and year-on-year than activity. rather a year-on-year, guidance

through. of see we weeks mowing sort last to the within those GMV GMV as range markdown in six location. see the of Board of terms the was we that the started didn’t come towards actually That across hit So geographical

Mainland ahead QX traditional QX Plus markets France overall and markets, we also just maybe overall accelerated the between some the QX, like accelerate delivering U.S. ahead China highlights the between Markets So of ahead and QX sort average. of, Korea ahead I and grown actually run Russia the accelerated top the like the also growing like core Italy if Asian of then markets overall and of average, overall through of saw ahead leverage. accelerated again and of average. other average some of overall and our

there and than we was broad So that markdown the sort growth was only thing. full deviation really a that’s bit the the softer really think based really on markdown versus actually fact of and good a price strong were I expecting.

plus were autumn/winter marketplace on on back thing, sellers margins into the our million saw why hence really and able full XXX,XXX price tell the growing to saw maximize their buy good they Stephanie a said, to They X hold now as were you to customers, levels into base markdown active desirable the quarter. campaigns, a XX% up the drive customer which helped Obviously in up, most year-on-year, rate the ARV sellers key importantly, metric to campaign. XX%, ARV coming and from It’s highly And commission obviously consumers, us. more their actually XX.X% was the building up the campaign. revenue is take all over solutions back revenue because significantly from immediate the solutions that’s the brands. year-on-year, new for up drove over strong Our from the spring/summer able me carry which rate, take media

of wants So, industry really mix. well positioned just delivering the in what higher full terms price

Operator

from Your next with question Goldman is Louise Sachs. Singlehurst

Louise Singlehurst

Hi. Good evening, for taking everyone. my Thanks questions.

ago. with share a go luxury, growth the you’ve concern regional the information quite for obviously, lot a at already. bit Let’s regard to volatility market prices that to June seems more given, a you’ve bit long currently the there’s of a we see in back color of given can time end in quite outlook But of the

seeing, for and you on the comparable you about That to And about we secondly, availability? is you us on Farfetch any have the a but you the the about the that the the and you there to environment? about would JV, coming by the can Now, if that to there your the support just know there inventory Tmall? coming slightly of JV talked quarter? attracted and be China just be through, that a how final thinking little brands Are China we Thank also benefit competitive there you importer the bit the regions from into And sorry, in there on thinking original brands on are that availability? question number any for Is the by? you. go platform? platform, ones any Obviously, different change through logistics I JV, as the that provided I related app And I about very what can not depth through the outlook think with the should to have have said, three us then, close point logistics anything app? any is I tell there all think past the customer Does China then is on partners? the Alibaba, inventory -- you’re QX ago? tell versus operational, not benefits China, now net about the fantastic. you we with, being posed is where China are selling differently, you’re think, be, us months inventory

Elliot Jordan

Louise. Hi,

the me mix Let regional up just question. follow on

the As talk usual, of I QX of quarter in. rates regional information the let’s maybe won’t from be But we’re of just providing exit that mix. about terms sort about sort in

direct I relationship TLP sort and accelerated touched both as sort We’re we overall really out the said, quarter. and on growth of the seeing is of before of enabler really on of but the building, proposition, the here, have app Farfetch as also and customers on China the key via José with

good we top reasonably up another start the strong seeing quarter seeing U.K. levels deliver the from And continue and also sort of five QX. into We’re the as U.S. we trade pick to exited the of actually growth as market through. of

XXXX acceleration the interesting first those all guidance on I’ve a two-year XXX% is over on this effectively stores to what’s reopened, the just that a fantastic markets we’ve on And for an so about continues stack, and basis the growth. growth I are physical from talked levels of position XX% that have year, basis. of that given where marketplace half think of actually two-year yet reopened, have stores is, deliver markets

consumers proposition, out around global really any might So, world good way. really the this broad those distributed we think, to well top that able head to-date come active But million build are investments through the navigate highlights challenges the to fact we’re growth as markets growth, I made our the driving plus we’ve the into QX. that our X and

José Neves

great Hi, and to Louise, you. speak to

supplied In proposition. terms of the China

strong. I think extremely it is

So and that to that I the Farfetch the on the see are brands available our any cover that we that in West you app and we here China app, have it’s think, full brands don’t I globally. can in are assortment important in right? all don’t highlight

very that’s think I So important.

full brands channel. is very available adoption channel. When In strong a from their available terms of seen on Tmall, Tmall the is with on it assortment. brand We’ve a

what asked capability them this one have have that number of that number great of is recently, times same brands have and ago, before think months, on from we have And Tmall you both having that of started have that app. on a launched very SKUs that. quarter. There time for months the Tmall. of have our launch I on the updated, month, Farfetch think new benefited is have X.X those just brand brands the via Tmall Tmall. that, of that that Farfetch brands from some So case on average a I three those There studies we some compare we will brands brands direct to two as the to presence number have Like, and on a presence

is strong that studies customers, this, So XXX brands we’re attracting the XXX current the very like customer. So million a we we what the boosting young very are with think incredible, attracting a we can supply, Actually, with attracting China of young I we start sharing is shoppers case your to complimentary right? actually and think, question, those because make segue and comfortable. part -- second million on them other in we’re visibility globally. have But soon seeing that has to we’re very we’re good customers asset really it’s

about we but average So on age age globally. China XX of in so XX younger, of even take versus years years will --

our XX% to is are which moving brands offer Farfetch from the offer differentiation that we a Tmall. So again of of strong

Tmall. on mentioned, wholesale NAP on a other you company, know. model, They you the operate as on retail The model,

that brands account because leave limited brands. of that inventory, front So within haven’t these had XX I wouldn’t in an me the then would of times very have of I and I more number each I much --

customer majority we apples-to-apples, of and -- the those brands editorial, really don’t and in this model merchandising, is of there on that again, the type or different, are terms cohorts take they’re that’s a give the the a I attracting we know marketplace growth X,XXX fact on And Because can operate in in compare think Tmall. China coming So customer very proposition. you representatives globally. from with different millennial we generation very

in So strong, people we competitive a we terms that have XXX market. of companies a market, we have very have Western very, And that the position think in we in again, on ground, engineers Chinese and Android, both for logistic and proposition app functionality private cross an domestic by why with designers and iOS both incredible unique to built people your and border. incredible on way

And really think another That’s a I very under the immense. we’re year of position. strong I opportunity the luxury penetrated. very very, So is in China. And think in repatriation is China luxury one of of demand

related concerns are stocks some to luxury So in there volatility in today market China. -- some and were even with the there if

the we penetration plenty certainly this environment virtue observe when people, we our don’t growth. we dynamic. the post-COVID, know even tailwinds this think will we in the in to clear, channel for lower have while for of more in of point already are be many that strong relevant the And these very are brands but than that I it’s of and very continue means, become by numbers strong investors and should sales very will single-digit with China, room luxury is West all and

Operator

Your with next from question Stephen CS. is Ju

Stephen Ju

so Okay. Thank you much.

I about mix your this would guess, would Elliot, right, do partners. require that sales with the got ask you markdowns think What a the you it in you not earlier, is And something suggests to this wholesale think category? as greater are taking versus have for versus to heavier we the which seller? your, comments first-party seems price follow-up very this full competitors would in beauty category. want is I sitting brand marketplace participation earlier, markdown I think so your to on -- well Is efforts José, be going So, the

will others? a from Thanks. to there hope you what extent and to of versus is can brands share terms anything feedback work the we So, greater the the with in be willingness Farfetch increased

Stephanie Phair

Hi, the bigger will Stephen. It’s question. take Stephanie. I

in well the mentioned, duty think, good. see we to huge is just call, I great earnings booming XX% as So, we’re also luxury opportunity fashion, positioned is category, we a last and In as category of as a it do. very it’s overall we here the a meet

In And in then a our to the with really because enable is to last the they proposition, few brands focused move traditionally It’s them. to them. e-concession model. that wholesale think, been And of really have of very, to it’s what unique. It own offering Brands crucially, I for appetite on there’s very helps and us. we for with us model are can terms move U.K. our them work has and months direct-to-consumer. the direct-to-consumer we’re conversations it’s trying cemented very that to in enables

of So respond we’re sort e-concession. really opportunity to working our and for some efforts Obviously, with to working and of benefit don’t that the the around category. We’ve is have we on But third-party complementing marketplace buys real saw this round our Farfetch. we feel this also a customers.

luxury opportunity to have And is would hearing from target new a channels. orders. that brands see targeted not this We only very they is sales channel, us an audience highly actually beauty advertising, valuable, through a as what the but our engaged distribution we’re

and us for track significant it’s for on much So very really the and opportunity multifaceted XXXX.

Elliot Jordan

what want the really markdown margins sort sort drove price don’t strategy. comment of the on to higher [ph] the in I competitors doing Clearly business. high the full mix the position. of for just much price royalty full around were And on gross us markdown too

year the strong this I year, so margins. in that would interesting gross XX% the numbers, driving The saw have hope helping acted stock margins onto more mix XX% Farfetch our versus which platform. is as would, You last brands price they margins full

we for QX, of us obviously very campaign, seeing good really into get which autumn/winter product, sets well important into up spring we’re quarter. and in going As QX the terms growth the autumn/winter original season importantly,

engagement around We’re content brands also seeing the the good on from and levels of platform. editorial

across positioned half on talked and the them as today numbers That two-year a helping well that. growth second to means navigate I the about acceleration we deliver basis. the said, through we’re of we’re So definitely

the that’s XXX,XXX expectation -- thing if that moving think higher last that other of lifetime year, the the added at platform interesting customers last I with are and on growth shop markdown added the XXX,XXX QX, added we that was a XXX,XXX recently these that for you look higher a customers in my actually, customers QX played than the mix given GMV across double-digit quarter than higher to these that’s value forward customers during from we’ve most deliver versus full them the mix this time a We mix, XXX,XXX price more full we much is, X out. super a a though customers price the customer the first to valuable going us And saw QX. more year, already which cohort.

can I only brands achieved assume question, that more move So forward. in to delighted full mix. uploading And exciting stock as the super the from we that’s because what price are back we terms delivering it’s platform of go have your to high certainly on

I campaign over months. drive to going through it’s for the can So think autumn/winter them how really we interesting price be see next the six full to

Operator

with The time we one more question come Morgan final Lauren question. And for will have Stanley. from Schenk

Nathan Feather

Hi. Nathan Lauren. for This is Feather on

for rest duties in Just headwinds or full year? your shipping and size able a are then much for the the is the to and guidance third in And were able -- that impactful digital to you platform are assuming these in margin you. how quarter gross the the of headwinds relief quarter the and me, these? year, impact of to due continue any for decline are quick they Thank margin how

Elliot Jordan

Hi, Nathan. Really good question.

we and on order understand with particularly that because platform a for it’s within going contribution, lot us. metric term. and key the gross digital think what’s both there’s happening near-term do margins exactly the I longer And

specifically, through. rate impact at in look order If take direction terms and contribution XP shipping going in right duties. the the coming had, up. margin, services was The higher we We of margin you except obviously, everything QX of had for overall,

gross and generation exclude back our will was to underlying higher before, Our when margin demand of GMV. shipping I down margins duties, mentioned marketplace you come you of as it if first-party compare percentage also lower sort higher to, as and revenue a which

of of shipping so through and In in compares growth. and terms XX% to the XX%, obviously, GMV, year-on-year increasing very north was ARV much XX% that of that terms duties, of of and cost GMV part north came the from

below was order number. So growth XX% the

The XX% in how fulfillment XXs grew So year-on-year. increase growth that showed the shipping the we our order of pass was year-on-year. you customers amount to versus revenue on that dramatic lower line, only

see you charges. decided incremental these So from not XP mix gross sole margin, And the industry-wide apart incurred profit to see impact that big a obviously on versus had XP We we our can the business. direct the from customers. to on that reduction you’ll gross cost in of that obviously pass terms to margin the impact

external deal pressure. into we’re forward QX, continue have to with look that going to we As cost to

shipping duties So will and continue increase. to

and inflation. going including coming engine cost IDFA et marketing some from other cost taxes, We’re cetera, sales And through regulatory also see further search changes, additional to think the I et cetera.

also team, activity year continue we marketing topline consistently deliver those but given those to-date, the customer margin drive build investments previous And and back to for track plan. profitability those to the platform other growth. in in our revenue But means from higher further headwinds on areas from to full the the obviously due you manage operations will accounts in contribution of target need that built near-term. delivering business order particular we’ve and on on to still products, growth ability as of the margin we’re the to tech through strong on the We expansion group I’ve our engagement

can those our -- costs we our numbers. short-term So, manage short-term medium- achieve still and

opportunities to up that drive in XP against our that by invested to down shipping of ahead, cost facilities already XP This will former If the we’ve closer further drive Farfetch order customers. executing margin help includes you in, stock is medium-term. the contribution, gross look shipping we’re which and the all

as the we growth margins cost gross We’re year. that and of means ahead also first-party next low expansion improving our from get we through order into see marketing channels contribution

So costs. the manage for we’ll now,

moving get the of provinces We customer growth going that’s us will good to set level I sustainable forwards. to continue deliver and levels up from well to at think

Alice Ryder

Well, quarter. and to forward Hope joining of thanks enjoy speaking you your look the us to you everyone rest for next today. summer

Operator

Thank conference today’s call. for concludes you This participating.

now disconnect. You may

Farfetch (FTCHQ) 20 Aug 212021 Q2 Earnings call transcript