YipitData’s FTCH team calls for Digital Platform GMV to miss consensus by over 20% in 1Q22

Background

From its 2018 IPO through 2021, online luxury marketplace Farfetch exceeded its long-term target of a 30%+ GMV CAGR each year. Going into 4Q21 earnings in February 2022, sell side consensus estimates forecast 25% Y/Y Digital Platform GMV growth in 1Q22 and 29% Y/Y for FY2022.

The Questions

  • How will Farfetch’s Digital Platform GMV growth trend as it laps very strong 2021 comps?

  • Will 1Q22 and FY2022 GMV growth be able to meet consensus estimates?

The Answers

Ahead of 4Q21 earnings in February 2022, our Farfetch team estimated that 4Q Digital Platform GMV would come in line with guidance but that 1QTD growth had decelerated to the low single digits, well below consensus of 25%. Our call generated significant client skepticism given the sharp nature of the deceleration.

When results were announced, our 4Q GMV estimate was accurate (within 1.0%). However, FTCH guided to 28-32% Y/Y growth for the full year, declining to provide quarterly guidance for 1Q (which it had given in prior quarters).

Following 4Q earnings, we continued to hear significant investor pushback on the credibility of our 1QTD data, which remained >15pp below consensus (still in the low 20s) and well below investor expectations for much of the quarter.

The Results

However, when 1Q22 earnings were reported in May, 1Q Digital Platform GMV grew 2% Y/Y, within 2% of our estimate (and nearly 20pp below where consensus was at the beginning of the quarter). In addition, management dramatically reduced its full year guide from 28-32% to 5-10% Y/Y. In the time between when we first published our below consensus 1QTD data and when FTCH reported 1Q results, the stock declined 56% (vs the S&P down ~18% over the same period).

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