Farfetch’s José Neves Watching Amazon, but Looking Forward

José Neves knows Amazon is there, lurking, but the founder, chairman and chief executive officer of luxury platform Farfetch seems more watchful than worried.

“Never underestimate Amazon, it’s such a successful business,” Neves said during interview with WWD when asked about Amazon’s still behind-the-scenes preparations for a luxury platform.

“Our data and our conversations with brands indicate they are still far away from getting traction from the industry,” Neves said. “But we’ll keep a watchful eye.”

And along with that watchful eye, he plans on keeping his foot on the accelerator.

“We believe that the focus has to be on continuing to add value,” he said. “We had 100 percent retention of our top brands and top 100 retailers” over the past three years.

Farfetch might have shaken investor confidence last year, in part by getting into the production side of fashion by buying Off-White licensee New Guards Group, but it seems to be proving its mettle in the crisis, adding more than 500,000 new customers in the second quarter.

Revenues for the three months ended June 30 rose 74.3 percent to $364.7 million. And adjusted losses before interest, taxes, depreciation and amortization tallied $25 million, better than year earlier and sufficient for Farfetch to say it was progressing toward its target of full-year profitability under the measure in 2021.

Oliver Chen, an analyst at Cowen, called Farfetch the “luxury platform of choice,” pointing to its “impressive new customer acquisitions with less promotional activity.”

“We are encouraged by substantial growth at Farfetch versus other traditional luxury peers and believe Farfetch is gaining market share from both e-commerce and brick-and-mortar competitors,” Chen said.

The analyst pointed the New Guards division, which also includes brands such as Palm Angels and Ambush, as well as exclusives from major brands, as important advantages.

“Outside of New Guards Group, Farfetch has been building on its brand relationships to secure exclusivity for drop or capsule collections,” Chen said. “For example, Farfetch offered Gucci’s Off the Grid, Burberry’s Summer Monogram Capsule and Marni’s homeware collection,” he said. “Further, Farfetch will be the sole multibrand online channel for Fenty Beauty by Rihanna.”

Investors certainly liked what they saw in the quarter and can divine for the future, pushing shares of Farfetch up 10 percent to $29 in midday trading Friday, giving the firm a market capitalization of nearly $10 billion.

Neves painted Farfetch as something of a savior for fashion in the midst of the coronavirus crisis, helping customers find brands and brands and retailers find customers.

He also sees the ever-more digital world coming toward Farfetch’s positioning at an even faster pace and described it as a “sustained paradigm shift” on both the parts of shoppers and brands.

The new customers pouring into Farfetch come from across the spectrum, he said, pointing to surveys the company has conducted.

“The vast majority of responses say they are increasing their online shopping for luxury because it’s more convenient and they can find a range they cannot find in stores,” he said.

The average Farfetch customer is around 34 years old, which Neves called the “sweet spot for luxury growth.”

And as Neves chases that growth, he’ll be doing so with some fresh eyes.

Farfetch made sweeping changes to its board on Thursday, with five members stepped down, including co-chair Natalie Massenet, in what Neves described as a long-planned evolution.

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