








Here is an EASY thread

Farftech $FTCH is a online luxury platform
that connects consumers with over 1.200 luxury boutiques
across the world 
It takes a commission (25% - 33%) on each sale (with 8% more if $FTCH handles fulfilment)
And it doesn’t own inventory



It takes a commission (25% - 33%) on each sale (with 8% more if $FTCH handles fulfilment)


It was founded in 2007 by Jose Neves
A fashion entrepreneur also known for launching SWEAR and SIX London 
SIX London develops and manufactures footwear
for leading luxury brands such as Comme des Garcons, JW Anderson, Hood By Air…


SIX London develops and manufactures footwear

It then distributes and sells these to over 600 luxury boutiques worldwide
Clients include Nordstrom, Bloomingdales, Hudson Bay, Galleries Lafayette, Harvey Nichols, United Arrows

Clients include Nordstrom, Bloomingdales, Hudson Bay, Galleries Lafayette, Harvey Nichols, United Arrows

This valuable experience were key for $FTCH
as Jose Neves wanted to offer a single portal
for luxury buyers to shop from independent luxury boutiques across the world 
Jose Neves is not the only fashion veteran behind $FTCH
Nathalie Massenet joined ranks as well



Jose Neves is not the only fashion veteran behind $FTCH

She is the founder of Net-A-Porter which now does $ 1.4B in sales as part of the YOOX Net-A-Porter group

So here we have 2 industry veterans
with a solid background in both fashion 
and technology
working on a luxury #eCommerce player 
How did that turn out? Here are some key milestones





How did that turn out? Here are some key milestones

Jose Neves officially launched $FTCH on the 9th of October 2008 with just 5 employees 
By 2011, it already had over 100 retailers on its platform
In 2013 it had over 240k marketplace customers
and that number grew to 1 million by 2016

By 2011, it already had over 100 retailers on its platform

In 2013 it had over 240k marketplace customers


In 2017, $JD invested $ 397m in $FTCH
This stake now represents 16.5% of the company
By the time of its IPO in September 2018
$FTCH sales stood at $ 267m for the first half of the year

By the time of its IPO in September 2018

But
Do they STILL manage to GROW? 
For Q2 ’20, revenue stood at $ 364m, coming from $ 209m a year earlier (74% YoY growth)
YoY revenue growth for Q1 ’20 stood at 90% , Q4 ’19 at 96% and Q3 ’19 at 90% 
Fair to say
They manage to keep up their growth!





Fair to say

Are customers loyal?
$FTCH “ACCESS” loyalty program counts 2m members in Q2 ’20 (1.4m in Q1 ’20 and 1m in Q4 ’19)
$FTCH active consumers reached 2.5m in Q2 ’20 (2.1m in Q1 ’20 and 1.4m in Q4 ’19)
App installs more than DOUBLED YoY - Potentially locking in customers LT



$FTCH takes its growth from the GLOBAL shift to online sales
Share of online luxury sales (% of total luxury sales) should reach 30% by 2025 - From 12% today and 9% in 2017
This is an upward revision that takes into account the effect of the pandemic (prior est. at 25%)



All in all, $FTCH is boosted by the natural shift to online sales which is further supported by 2 factors 
Growing appetite for luxury goods in China
Sales growing by 20% in 2019









...renewed passion for in-real-life experiences), but some digital shopping habits built during the outbreak will stick—especially if brands raise their game in online assortment, user experience and digital marketing.”
Ok, so the luxury sales are growing
and shifting online
What are $FTCH other activities?
Seller Tools
Logistical intelligence and key stats for shops listed on its website
Store Of The Future
Stores filled with technology (RFID-enabled clothing racks...






...digital mirrors, connection to $FTCH platform) to improve retail productivity by capturing consumer data
Farfetch Black & White Solutions
eCommerce management, operations support, international logistics support and technical support for luxury brands - $SHOP for luxury


On this last solution, Jose Neves says the following 
“By using our API, the brands, even on their own websites, can offer inventory from their physical stores”
“If a brand wants to sell on WeChat in China, they just need to use our API code and integrate their operations”

“By using our API, the brands, even on their own websites, can offer inventory from their physical stores”
“If a brand wants to sell on WeChat in China, they just need to use our API code and integrate their operations”

$FTCH unlocked the Chinese market through 2 investments


“As part of this relationship, Farfetch leverages $JD local logistics network, consumer payment solutions, technology capabilities, and its marketing resources, including its WeChat partnership. [...] will give us valuable insight into the Chinese market [...]”






$FTCH is playing a very smart game in China by getting investments from $JD and $TCHEY 
By levering the WeChat platform (1B users) it is fully exploiting the power of sales through mobile phones in China
and playing right at the heart of changing consumer habits

By levering the WeChat platform (1B users) it is fully exploiting the power of sales through mobile phones in China


Here is what Jose Neves has to say on WeChat 
“We have a WeChat account and a WeChat store where you can purchase all the products available on Farfetch, via WeChat. We will also launch a Mini Program very soon. So we’re fully integrated with WeChat”

“We have a WeChat account and a WeChat store where you can purchase all the products available on Farfetch, via WeChat. We will also launch a Mini Program very soon. So we’re fully integrated with WeChat”
Read all the interview right here
https://www.europastar.com/time-business/1004090145-farfetch-the-online-retail-giant-targets-china.html

Last stop
VERTICAL INTEGRATION 
In August 2019, $FTCH purchased News Guard Group (NGG), Off-White’s parent company
It paid $ 675m, equally divided in cash & shares
At first, the world stood in shock and the shares plunged 40%
Is it all that bad?


In August 2019, $FTCH purchased News Guard Group (NGG), Off-White’s parent company

It paid $ 675m, equally divided in cash & shares

At first, the world stood in shock and the shares plunged 40%

Is it all that bad?

What first scared investors was the apparent lack of rationale
for this acquisition and the pile up in debt 
$FTCH is an asset-light platform
It should focus on its high-margins activities





Well, there is another side of the equation
GQ, the magazine, compared this acquisition to $NFLX producing its own shows
“Stranger Things is to Netflix what whatever the next Off-White is to Farfetch.”


By the time of the acquisition
NGG was growing by 59% YoY with Gross Margins of 55%
In the 6 months following the acquisition
Off-White sales on $FTCH had increased by 80% YoY

In the 6 months following the acquisition

It released the Air Jordan 4 x Off-White ‘Sail’ in July and sold out the same day
This generated 800 million hits on the Farfetch platform within the first hour


$FTCH has built a considerable MOAT 
“THE” luxury platform (taking a 25 to 33% commission) on a global scale and locking in the luxury market in China 
Quietly becoming the $SHOP of luxury, providing operations, logistical and development help to brands globally







In the end it all makes sense

A quick look at their financials 
For Q2 ’20, revenue stood at $364m, coming from $209m a year earlier (74% YoY growth)
Gross margins have stayed consistent at around 40% - 45%

















Here is a review for $VRM - would love to hear your take on the matter 
@john__rosevear
@Ryan_Burgio
@TMFJaguar
@TMFBowman

@john__rosevear
@Ryan_Burgio
@TMFJaguar
@TMFBowman
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Disclaimer - This is not investment advice in any form and investors are responsible for conducting their own research before investing.
Sources
✑ Investor presentation
✑ Company website
✑ Financial Times
✑ Forbes
Sources
✑ Investor presentation
✑ Company website
✑ Financial Times
✑ Forbes
✑ Business Of Fashion
✑ Retail Dive
✑ Bloomberg
✑ Europa Star
✑ GQ
✑ BCG, Bain & Company, McKinsey
✑ Jing Daily
✑ Felix Capital on Medium
✑ Fashion Network
✑ Retail Dive
✑ Bloomberg
✑ Europa Star
✑ GQ
✑ BCG, Bain & Company, McKinsey
✑ Jing Daily
✑ Felix Capital on Medium
✑ Fashion Network