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The first annual accounts after the entry on the New York Stock Exchange of Farfetch, the platform of online sale of luxury fashion founded by the Portuguese José Neves, exceeded expectations of who accompanies the company on Wall Street. For José Neves, the figures for 2018 reflect a year that was an authentic blockbuster.
According to the accounts released on Thursday, after the market closes, the Gross turnover for the year amounted to $ 1407 million., thus breaking the billions of billions and exceeding by almost 55% the gross turnover of 910 million dollars of 2017.
The 1407 million are the consolidated result, that is, include sales through the platform (1392 million) as well as all other sources of revenue. That in 2018 were even more diversified, with the bet on Black & White Solutions resulting in the launch of six new sites for other brands (including two from LVMH, JW Anderson and Emilio Pucci). It also shows that the company manages to monetize in various ways the technology developed mainly in Portugal.
The accounts do not yet reflect the full cost of the acquisition of Stadium Goods, announced in mid-December for 250 million euros, but show a management that has re-charged the investment foot pedal. On a like-for-like basis, spending on technology has more than doubled in 2018, surpassing 68 million dollars, against 31.6 million in 2017.
Only in the fourth quarter of 2018, that is to say, the period after the admission to the Wall Street stock market, these costs rose 49.5% over the same period last year, mainly due to the reinforcement of the team through contracting and higher expenses with infrastructure, technological structures to support growth.
The growth of the company was also evidenced by the rise in general costs (administrative, sales and others), but as a percentage of adjusted profit, these costs now weigh less, denoting greater operational efficiency.
Accounts made, the consolidated revenues (the part of the gross invoice that stays in the company) amounted to 602 million dollars (against 385 million in the previous year), with EBITDA (profits before taxes, interest, depreciation and amortizations, a measure of the company's operational efficiency) of -95 million dollars. The end result was negative (acceptable in an expanding enterprise with high levels of investment), with the loss amounting to 155 million dollars.
Over and above
For the market, these data are still eye-popping: the return per share was six cents higher expected by the analysts who accompany the company.
In fact, the cost of sales, which has risen but in a smaller proportion to the increase in total sales, suggests that the company is on a path that appeals to investors who this week encouraged (and much) Farfetch shares on Wall Street. The price hit $ 25.75 per share, a strong appreciation that had moments worthy of registration, as on the eve of the announcement of the commercial agreement with the famous London warehouses Harrods. Agreement that later sustained a rise in the price during practically all the week – and that made José Neves, 44, a multimillionaire again. On January 3, each share was worth $ 16.10.
It closed on Thursday for $ 24.20 (down 1.61% from the previous session), but it would exceed $ 25 (25.20) after closing, when a week had ended trading in the 20 , $ 19. At Thursday's price, the company has a stock market value of 7460 million dollars.
According to the ranking of the magazine Forbes, the net wealth of the entrepreneur touched again the $ 1 billion, which had already happened when the company entered the New York Stock Exchange in September 2018. Neves owns 15% of the shares, but controls 77% of the voting rights. Shares appreciated sharply after admission to Wall Street, but declined during the following months until they reversed the trend in recent times.
Today, Farfetch is a much richer company (assets amounted to 1300 million dollars), but this was mainly due to the enormous liquidity gain, due to the dispersion of stocks.
"By all indicators, the year 2018 was a year blockbuster"said the entrepreneur, whose roots are in the North of the country, and who created the company ten years ago. The management team expects 40% revenue growth in 2019. And he believes he will continue to gain market share, the help of the partnership with the Chinese giant JD.com, with whom it is working the luxury fashion market in China and whose platform Toplife has just absorbed.JD.com has 300 million users and is the second largest trader of China.
The platform had, as of 31 December 2018, 1,353 million active customers, having processed 2.9 million orders that year. The average order value remained broadly unchanged: $ 618.6 in 2018, compared to $ 620 in 2017.
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