Reports have emerged suggesting that José Neves, the founder of Farfetch, an online luxury fashion retailer, is contemplating taking the company private. Neves, who holds a significant 15% stake along with 77% of the voting rights, is purportedly working closely with advisors at JPMorgan regarding this potential shift, as per a paywalled article in The Telegraph reported by Reuters on Tuesday.
Recent Press Release
Despite PYMNTS’ attempts to reach out for comment, Farfetch did not immediately respond to inquiries. In a recent press release on Tuesday, the retailer made an unexpected announcement, stating that it will refrain from disclosing its third quarter 2023 financial results. Moreover, the previously planned conference call related to these results has been canceled. Farfetch conveyed in the release that it plans to furnish a market update in the foreseeable future, emphasizing the discontinuation of forecasts or guidance. Any previous projections are advised against reliance.
The initiative to privatize the company by Neves comes on the heels of a troubled period subsequent to its listing on the New York Stock Exchange, as highlighted in the Reuters report. This year, Farfetch’s stock has witnessed a sharp decline of 64%. However, following the revelation of Neves’ intentions, the stock experienced a notable surge of 20%, as reported.
Key stakeholders such as Chinese eCommerce giant Alibaba and Swiss luxury conglomerate Richemont have tentatively expressed support for Neves’ proposed move, according to the report.
Reflecting on the company’s history, Farfetch accrued a substantial $885 million through its initial public offering (IPO) back in September 2018. This IPO involved the sale of 44.2 million shares at $20 each, exceeding the initially advertised price range of $17 to $19 per share.
However, troubles loomed just a year later in August 2019 when Farfetch’s shares plummeted to 50% of their IPO price. This nosedive followed significant losses reported by the company, coupled with investor skepticism regarding its acquisition of New Guards, raising concerns about the rationale behind such a move for a company operating at a loss.
Signs of Recovery
In more recent times, Farfetch demonstrated signs of recovery. In May, the retailer surprised analysts with an 8% year-over-year revenue growth, attributing its success to improved inventory management, strategic partnerships, and robust in-store sales. This achievement led to a bullish response from traders, boosting Farfetch’s share value in June.
The developments within Farfetch continue to unfold amidst ongoing uncertainties surrounding its future trajectory and potential privatization under Neves’ leadership.