Farfetch: Luxury Fashion Is Likely In Trouble

Farfetch’s investors have been on a wild ride in the last few years, with shares up 558% and down 89% within 2 years.

The share price has bottomed somewhat after a recent fall.

Everything is in place for success, but unfortunately, we see tough times ahead. Macro conditions are worsening and Farfetch’s financials look problematic.

A risk Farfetch faces is that brands will take their products off the marketplace and go direct to consumers.

This is already happening as Nike footlocker and LVMH are not allowing online sales of its products. 

Therefore, the coming 24 months could be the hardest in Farfetch’s history, with no real ability to mitigate or offset the impact of weakening demand of a possible “recession”.

Farfetch operating margin
Farfetch’s operating margin 2015-2021 (Tikr Terminal)

If this happens, people would lose their jobs and there would be general reduction in revenue hence buying luxury products would decline.


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