Can Farfetch change the narrative around fashion technology?

The movement is running out

  • Farfetch announces results for the first quarter of May 26th
  • Shares of the company fell more than 80 percent last year, reflecting a decline in the technology sector
  • Investors are concerned about the ability of online brands and retailers to grow and achieve profitability as consumers return to ordinary stores

Farfetch is a master at rediscovering himself to keep up with the latest trends in online retail. But it’s hard to convince investors that it’s not just another pandemic action. Like most other e-commerce companies, the luxury market has benefited greatly from the online retail booms of 2020 and 2021. Now that consumers are returning to their pre-Covid shopping habits, Farfetch must prove it has a plan B.

Earlier this year, Farfetch made a strong breakthrough in beauty, although adding a new category does not address e-commerce issues after the pandemic. The $ 200 million investment in the Neiman Marcus Group marks a major expansion of the market’s ambitions to provide e-commerce services to less connected retailers. It’s a potentially lucrative market, though the rapid decline in Shopify’s wealth suggests that running the back of online retail isn’t as dynamic a business as it looked a year or two ago.

Conclusion: A real change of game for Farfetch would be a partnership with Richemont that involves a minority investment in Yoox Net-a-Porter. Such an agreement would neutralize the main competitor and open new relationships with luxury brands. But the parties have said little about the agreement since it was announced late last year. Last week, Richemont shares fell after the company failed to indicate progress towards the agreement.

Changeable red carpet

  • The Cannes Film Festival ends on May 28, and among the most important events is the amfAR Gala on May 26
  • Along with the Oscars and the Met Gala, film festivals are a key component of luxury brand strategies on the red carpet
  • Revolve is sponsoring amfAR Gala afterparty

The Cannes Film Festival is one of the major marketing opportunities for luxury brands, with a packed schedule of events and film premieres where celebrities can pose for the paparazzi. The AmfAR Gala ends the week, with an A-list of guests and a fashion show curated by Carine Roitfeld. By the way, the leading sponsor of the event is not a luxury brand or a brand of premium alcoholic beverages, but FTX, a crypto exchange (sponsorship is not completely separate from fashion; just last week, Balenciaga became the latest brand to say it would start receiving payments in cryptocurrencies). Afterparty is sponsored by Revolve, an online retailer that is better known for dressing influencers for Coachella than movie stars on the red carpet. Aside from being the latest indicator of how the line between influential and celebrities has blurred, entertainment is a smart move for Revolve, which wants to increase sales internationally.

Bottom Line: As for what the stars will wear, expect big European labels to dominate. Still, it is their home ground, although Louis Vuitton, Valentino and others were also ubiquitous at the Oscars and the Met Gala.

Nowhere to go but upstairs?

  • Gap Inc. announces results for the first quarter of May 26th
  • Last month, the boss of Old Navy, Gap’s biggest-selling brand, resigned unexpectedly
  • Some analysts predict that Gap will have to find a buyer for some or all of its brands if it cannot make a turnaround

Good news for Gap Inc. is that maybe all the bad news has already been charged. Last month, the boss of Old Navy suddenly left, as sales of the once top brand were below forecasts. A Wall Street Journal in last week’s report he cited a drop in a poorly executed move offer more comprehensive sizes in stores, which has contributed to many popular styles disappearing from stock. In a way, that explanation is more comforting than the alternative: that the cheap basics of Old Navy are losing their appeal, whether for Shein, Target, or Amazon. Gap needs Old Navy; The gap itself is still wandering, Banana Republic has not recovered from the pandemic strike on traditional office attire, and fast-growing Athletta is still too small to support its struggling sister brands.

Bottom Line: At an annual meeting earlier this month, executives offered a rosy look at the company’s turnaround. Few were convinced, and the company’s stock price continued to fall. This week’s results will have to show some convincing evidence that buyers are returning to Gap, Old Navy and others, or expect calls for spinoffs or sales to private equity to become louder.

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