Luxury fashion retailer
renewed its sales growth and narrowed its loss in the latest quarter. But Wedbush and
analysts aren’t buying into the strength until there’s more visibility.
After the market closed on Thursday,
(ticker: FTCH) posted a loss of 16 cents a share for the first quarter, the lowest since late 2021 and below the consensus of 40 cents a share on Wall Street. Sales of $556.4 million exceeded expectations of $513.2 million and grew 8.1% from a year ago. FarFetch posted a year-over-year sales drop in the previous quarter.
Sales in the first quarter were boosted by a new partnership with shoe brand Reebok and launching an e-commerce channel for Italian brand Ferragamo in Europe. Inventory levels also moved lower.
It was a quarter of “landmark launches,” CEO Jose Ferreira Neves said in a call discussing earnings. FarFetch said it expects to deliver positive Ebitda, or earnings before interest, taxes, depreciation, and amortization this year.
Still, UBS analyst Kunal Madhukar and team reiterated their Neutral ratings on the stock. “We continue to remain cautiously optimistic on the shares,” UBS said, in a note Friday. The analysts pointed to a market that remains highly promotional, citing the 10.4% decline in average order value.
Madhukar raised his price target to $5.25 from $5. FarFetch’s stock soared 22% to $5.29 in premarket trading Friday. It’s down 8.3% this year.
Wedbush’s Tom Nikic also reiterated his Neutral call on the stock Friday but kept the $5 price target. Nikic said much of FarFetch’s gross merchandise value — a measure of total dollar value of orders processed — was through inorganic drivers or the addition of clients not present in the prior quarters.
“While they could end up being adjusted EBITDA profitable this year, they’re still a long way from true EPS profitability,” Nikic said.
FarFetch didn’t immediately reply to a request for comment.
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