Dive Brief:
- Coupang Inc. CEO Bom Kim said his company was “highly confident” buying Farfetch “will prove to be a prudent financial decision,” according to a transcript of Coupang’s Q4 2023 earnings call Tuesday.
- While Coupang hadn’t been looking for an acquisition, Kim said the company “came across a rare opportunity to buy a sector leading service with $4 billion in [gross merchandise value] for a $500 million investment.” He said that in a few years, Coupang hoped to be “having the conversation about how Coupang turned Farfetch into a business that transformed the customer experience around luxury fashion” while adding that “it's too early for that conversation today.”
- In Q4 2023, Coupang reported net revenue of $6.6 billion, an increase of 20% year over year. On the earnings call, Kim told investors that Coupang’s active customers grew 16% for the period, and “the spend of every annual customer cohort is growing over 15%, even our oldest cohorts.”
Dive Insight:
Coupang completed its acquisition of Farfetch Holdings in January after announcing its intent to buy the company in December 2023.
The deal has become a touchpoint for luxury e-commerce. Benjamin Bond, principal in the consumer practice of Kearney, told Fashion Dive in a December email that the deal “is more than a financial rescue; it’s a strategic shift of the e-commerce and luxury retail landscape, unifying digital agility, logistical speed, with luxury exclusivity.”
On the Tuesday call, Kim said Coupang has already executed “on a plan to make Farfetch self-funding with no additional investment beyond the announced capital commitment,” adding “we see many paths to making this a worthwhile investment for shareholders.”
Nonetheless, Farfetch is in a period of flux. Earlier this month, it was reported that founder José Neves would step down as CEO and transition to a role as a consultant. Meanwhile the business will be managed by Kim and Farfetch’s executive team. A Farfetch spokesperson told Fashion Dive via email at the time the company had made “the difficult but necessary decision to reduce global headcount and redundant roles,” adding that the decision “secures the future of the business.”
A week after Coupang closed on its acquisition, a group of Farfetch noteholders asked a Cayman Islands court to liquidate the luxury e-commerce platform’s holding company and has requested that independent liquidators be appointed to take control of the company in order to investigate “the circumstances of its apparent rapid and unexplained failure, and manage the Company’s affairs in the interests of its creditors.”
