Farfetch mogul proposes making luxury fashion site private after US listing fails

Farfetch has lost more than 90% of its value since listing on the New York Stock Exchange in 2018. Photo: REUTERS/Brendan McDermid

The founder of British luxury fashion site Farfetch is plotting to take the company private after a disastrous US stock float.

José Neves is believed to be in talks with bankers and major shareholders, including owner of Cartier Richemont, in a deal that would abruptly end its short but unsuccessful tenure on the New York Stock Exchange.

The company has lost more than 90% of its value since listing on the market in 2018.

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It is believed that Mr Neves' plans to take the company off the stock market could be announced soon. Farfetch plans to release quarterly financial results on Wednesday.

The London-based shopping site helps wealthy people buy designer brands online, including clothing and accessories from Burberry and Gucci. It also serves as a gateway to thousands of independent boutiques.

Mr Neves, a Portuguese national who started his business in London fifteen years ago, is said to be working with consultants at JP Morgan. It retains 15% of the shares, but owns 77% of the voting shares through a dual class share structure.

The move is believed to have early support from major backers including Chinese e-commerce giant Alibaba and the Swiss luxury goods conglomerate. Richemont, which also owns online fashion house Yoox Net-a-Porter.

Alibaba and Richemont backed Farfetch three years ago in a complex agreement that saw the groups each invest $300 million ($236 million) in Farfetch pounds sterling) each, plus another $250 million each for a 25% stake in its Chinese subsidiary.

Net-a-Porter founder Dame Nathalie Massenet served as co-chairman of Farfetch for three years before leaving in 2020 following a board shake-up.

Mr. Neves retains a 15% stake in Farfetch but holds 77% of the voting rights through a dual class share structure. Photo: Julian Simmonds

At the time of its initial public offering in 2018, Farfetch was valued at $6.3 billion, with shares selling for $20.< /p>

Investors were encouraged by the boom in luxury goods sales at the time and were willing to look past the company's losses, which totaled £75.7m in the year it listed.

Farfetch struck a deal to sell Burberry clothing worldwide, and has also teamed up with Gucci to offer a 90-minute delivery service for the Italian fashion house's clothing and accessories. In the three months to the end of June, the company sold $1 billion worth of products on its platforms.

After peaking at over $73, Farfetch's share price has since fallen to just $1.71 following a series of stunning announcements. investor confidence. The company is now valued at $581 million.

In 2019, his market value was lost by more than $2 billion in a single day after he stunned investors with his surprise $675 million takeover of fashion brand New Guards Group. owner of the license for the fashion brand Off White, and reported more than expected losses.

Shareholders and analysts have accused management of abruptly shifting strategy from a low-risk, storefront model to a company that owns brands, stores and shares. Hedge funds began selling their shares aggressively.

Mr. Neves later defended the rationale for the deal, noting that New Guards Group was generating significant revenue and arguing that the deal would be a «test of its strength» . five years, ten years, not in August, September or October.”

Investors have also expressed concern about soaring costs. The company lost $455.6 million after taxes in the first six months of the year on revenue of $1.1 billion.

Bernstein analyst Luca Solca, a longtime critic, accused Farfetch of being «too fast» burn money.

Mr Solca told The Telegraph: “The business needs to be restructured and refocused.”

A Farfetch spokesman declined to comment.

Farfetch shares jumped. in New York, up to 20%, according to the Telegraph.