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| Statement |
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| We expect the initial transitional challenges to result in Reebok now delivering approximately $200 million across both the brand and digital platforms in 2023 and remain enthusiastic about the brand's prospects which is supported by the strong consumer and partner engagement since launch |
| So this is an incredible roster of clients for best-in-class luxury SaaS platform and that's what we're excited to be delivering against |
| I am delighted to be taking you through our Q2 results, a quarter which saw an acceleration of our digital platform growth as well as further progress across key strategic priorities for 2023 |
| And thanks to the decisive actions we've already taken in terms of fixed costs, we are confident we remain on track to be adjusted EBITDA profitable and free cash flow positive for full year '23 |
| And therefore, we remain very confident over the long-term plans for NGG and for the brand platform |
| So the portfolio is very strong |
| And thanks to our progress on all of these fronts, today, we occupy a unique leadership position in global luxury with an extremely exciting future ahead |
| We don't break out performance on the brand by brand, but the consumer demand around Off-White and Palm Angels remains very strong |
| So very confident in those numbers |
| This means Farfetch as a leader at the intersection of technology and Luxury is poised for significant growth and profitability |
| This reinforces our confidence in our previously stated plans to scale to a $10 billion GMV business, generating approximately $400 million in adjusted EBITDA and strong free cash flow by 2025 |
| Of course, that product, the business-to-business product runs at a higher gross margin, and a higher order contribution margin on the digital platform, driving that 33% to 35% overall for the full year |
| We’re starting to see that improve towards the back end of the year, and it helps drive up our overall order contribution margin |
| In terms of the digital platform, still very pleased with the overall position of order contribution margins there, just down 50 basis points year-on-year |
| We're able as a marketplace to adjust very quickly and boost our revenue and GMV once the macro environment becomes more favorable in some of our key geographies |
| We have a very healthy and profitable and fast-growing, have luxury category |
| We have been incredibly successful at category expansion |
| And with the decisive actions we’ve taken in terms of the cost and the fixed cost base in a much stronger profile in terms of profitability as well |
| As these reductions are structural in nature, we expect even greater savings for full year 2024, which we believe increases our ability to achieve our stated 2025 profitability goals |
| These are absolutely demonstrative our very strong competitive advantages, which will continue to drive market share capture over the next three years |
| So the guidance suggests significant second half share improvement versus your luxury peers relative to street numbers even though you've lost here (ph) for now like something like six or seven quarters |
| And again, we’re going to be on double-digit growth for the car business, a record year in terms of GMV profitability, generating cash |
| Obviously, second largest luxury goods market, and we have an impressive consumer proposition when we continue to see incredible potential in that business and in the partnerships we have in that country |
| So China is improving and with a sequential improvement |
| I'm pleased to report Farfetch continues to grow in Q2 with digital platform GMV up 7% and a stronger profitability profile |
| In-store growth for luxury is strong |
| I want to highlight that across most regions, our marketplace business is performing very strongly |
| There is a lot of health in our car business and an incredible advantage in terms of delivering on our strategic initiatives |
| The -- it's going to be a record year in terms of GMV at $4.4 billion GMV, the highest in our history as a business, a record year in terms of adjusted EBITDA, a year of positive free cash flow |
| And in the last two months, have doubled down by further rationalizing our business, all whilst delivering against our key strategic initiatives, which makes me more confident than ever in achieving our previously stated 2025 goals of scaling to a $10 billion GMV business, generating approximately $400 million in adjusted EBITDA and strong free cash flow and continuing to make progress in our mission to be the global platform for luxury |
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| And China went into a negative territory, which was a widespread phenomenon in the luxury industry |
| Finally, the brand platform experienced delays in shipping wholesale orders, meaning approximately $50 million in revenue at a circa 50% gross margin has moved from Q2 to the second half of the year |
| and UK, reduced intake deliveries due to heightened inventory positions, resulting from the challenging macro environment |
| You've seen the luxury industry, many luxury companies in double-digit negative in the U.S., wholesale doing worse than direct-to-consumer |
| Brand platform GMV declined 41% due to delayed wholesale shipments as retailers phase back deliveries of fall winter '23, whilst they clear through their spring/summer '23 inventory holdings |
| and China on the marketplace and as GMV from Reebok ramped up less quickly than anticipated |
| This estimate reflects ongoing macro headwinds affecting wholesale orders of existing brands offset by incremental GMV from the launch of Reebok this year |
| The digital platform grew slower than expected, driven by the U.S |
| The decrease in EBITDA versus last year was due to the delayed brand platform shipments, which we are now expecting to recognize an H2 revenue |
| The phasing of shipments was also due to some onboarding challenges with the launch of Reebok, which have resulted in a slower ramp-up |
| In Q2, Brand platform GMV decreased 41% to $63 million |
| For the remainder of the year, we expect wholesale to remain under pressure as we have seen retailers adjusting their open to buy for the spring/summer '24 season |
| The events of 2022, which led to the stoppage of our business in Russia, then our third largest market, a slowdown in China and adverse FX all amidst considerable macro volatility in U.S |
| We have pulled back, of course, as you would expect, in the two markets that we’re seeing broader macro challenges |
| This means moderating our GMV growth expectations |
| This decline in GMV had an impact on revenue which declined 1% year-on-year and gross profit, which declined 9% |
| The slower recovery in these two large markets, offsetting the strong momentum we continue to expect in most other regions leads us to moderate our second half 2023 growth expectations for the marketplace |
| Obviously, with the reduction in expected orders for the brand platform, we are also producing less and getting factories to produce less as we start to fulfill those orders going into next year |
| Obviously, the delayed shipments from Q2 going into the second half has had an impact on revenue, a flow-through down to profitability and, of course, on our inventory balance at the end of June, which is higher than that would have been had we shipped those orders |
| The reality is that the recovery has not been as robust as we had expected when we reported our Q1 results |
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