Is Luxury’s Favorite E-Tailer About to Go Bust?
Summary
Its share price has collapsed, rumors have been swirling that its founder is trying to take the company private and reports suggest it will need a lifeline of at least $500 million by the end of the year to prevent it from toppling into bankruptcy. Farfetch has multiple big-name investors, including Alibaba, the Chinese tech giant; Artemis, the holding company of the billionaire Pinault family, which owns Kering; and Richemont, the Swiss luxury group. This meant that a shopper in London could buy boots from an independent shop in Paris, or a customer in Beijing could source a bag that wasn’t available locally from a store almost 5,000 miles away in Venice. As consumer appetite for buying luxury goods online began to grow, the company also started working directly with fashion brands to build their websites and back-end operations. The luxury retailer’s appetite for risk started to become apparent in 2019, when more than $2 billion was wiped off its market value in a single day after it blindsided investors with a $675 million takeover of the Italian holding company New Guards Group, owner of the license for the fashion label Off White and brands like Palm Angels, and reported larger than expected losses.