Farfetch CEO says IPO on the horizon within 2-3 years
today Nov 7, 2016
Online luxury retailer Farfetch, valued at around $1.5 billion in a fund-raising this year, sees a flotation on the cards in two to three years once a phase of high investment is over, its CEO told Reuters.
Farfetch is a marketplace website that puts consumers in touch with trendy shops around the world that sell major labels and also enhances access to smaller fashion brands.
The site combines more than 500 boutiques, including L'Eclaireur in Paris, Maxfield in Los Angeles and Fivestory in New York. It launched in 2008 with a few boutiques such as Maria Luisa, which is known for nurturing younger designers.
In May, Farfetch raised $110 million from existing and new investors, including France's Eurazeo, Singapore sovereign wealth fund Temasek and China's IDG Capital.
When asked about the prospect of an IPO, Chief Executive and founder Jose Neves said Farfetch investors had it in mind as an objective but had not decided yet whether it would take place in London, New York or Hong Kong.
"We could start considering it in two to three years but not now as we are still in an intense investment phase," Neves told Reuters in an interview on the fringes of the Vogue Fashion Festival in Paris at the weekend.
"It will be the next major financial milestone for the company."
Neves said Farfetch was not planning on floating as early as the end of next year, as Bloomberg reported on Friday.
Neves, who is Portuguese, said the company, with 1,200 staff and 12 offices worldwide, was still lossmaking but "firmly on track to become profitable" in the medium term.
He did not give any details on the size of investment which will go towards opening new offices and boosting technology.
The value of transactions is set to reach more than $800 million this year, up from over $500 million in 2015. Farfetch takes a percentage as a commission but does not disclose the exact level.
Farfetch sells items from more than 1,500 designers, many of them tiny labels, which it estimates is twice the number carried by bigger online rivals such as Neiman Marcus or Net-a-Poter. An advantage of its business model is that it does not carry any stock.
It competes also against smaller rivals such as Miinto in Scandinavia and Shoptiques in the United States.
Revenue growth in the past few years has been around 60 percent, Neves said. "We have seen growth accelerating in the third quarter and in the fourth and do not expect this acceleration to stop."
His comments echoed stronger-than-expected results by big luxury groups for the third quarter, which analysts said augured well for the end of the year.
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