Farfetch, the luxury goods e-commerce platform that has been languishing on the brink of bankruptcy for months, has found a white knight. The retailer announced Monday that Coupang, said to be South Korea's answer to Amazon, will acquire Farfetch and provide a $500 million lifeline.
London-based Farfetch was once hailed as the most dominant force in luxury fashion. It listed on the New York Stock Exchange in 2018, and its value soared as consumers and luxury brands flocked to the site, reaching more than $23 billion at its peak in 2021.
But rising costs and debt, a series of high-risk investments and a downturn in the global luxury goods market caused the company's stock to plummet to a market capitalization of about $200 million. This predicament prompted founder and CEO José Neves, a 49-year-old Portuguese entrepreneur, to search hard for new investments.
At Coupang, South Korea's largest e-commerce retailer, Farfetch has found an alternative to bankruptcy that will allow it to continue operating. Coupang, which made its market debut in New York in 2021, has e-commerce operations in markets such as South Korea, Taiwan, Singapore and India, and also offers grocery, payment and video streaming services.
Greenoaks, a global investment firm, is Coupang's investment partner in the acquisition. As part of the agreement, Farfetch shares will be delisted and existing shareholders will be wiped out. Farfetch shares fell 35% in pre-market trading on Monday after the deal was announced.
“Coupang's proven track record and deep experience in commercial revolution will enable us to provide exceptional service to our brand and boutique partners and to our millions of customers around the world.” Neves, who remains, said. unspecified role.
Coupang founder and CEO Bom Kim called Farfetch a “landmark in the world of luxury” and a “transformative force in online luxury.”
“Farfetch is rededicated to delivering the best experiences for the world's most exclusive brands, while pursuing steady and thoughtful growth as a private company,” he said in a statement.
Farfetch's deal to acquire a 47.5% stake in rival Net-a-Porter from luxury goods group Richemont has been terminated, Richemont confirmed in a statement on Monday.
Farfetch, which connects shoppers with independent boutiques and also provides e-commerce services to major luxury brands and retailers, sought to reassure retail customers on Monday.
“Farfetch will continue to operate as usual, but with a strengthened balance sheet and cash position,” the company said in an email, adding that the partners “continue to work with the Farfetch team as they have for the past 15 years.”
The deal caps a tough year for many of the companies that once led luxury e-commerce. Matchesfashion.com, which was acquired by Apax Partners in 2017 for about $1 billion, will soon be sold to British retail giant Mike Ashley-owned Fraser Group for about $63 million, according to news reports over the weekend. It has been suggested.
