The founder of British luxury fashion site Farfetch is plotting to take the company private after a disastrous US float.
José Neves is understood to be in talks with bankers and top shareholders, who include Cartier-owner Richemont, about a deal that would bring an abrupt end to its short but calamitous stint on the New York Stock Exchange.
The company has lost more than 90pc of its value since listing on the market in 2018.
It is thought that Mr Neves’s plans to take the company off the stock market could be announced imminently. Farfetch is scheduled to report quarterly financial results on Wednesday.
The London shopping website helps wealthy people buy designer labels online, including clothing and accessories from Burberry and Gucci. It also acts as a gateway to thousands of independent boutiques.
Mr Neves, a Portuguese national who started the business in London fifteen years ago, is said to be working with advisers at JP Morgan. He retains a 15pc stake but holds 77pc of the voting rights through a dual-class share structure.
The move is believed to have the tentative backing of major backers including Chinese e-commerce giant Alibaba and Swiss luxury conglomerate Richemont, which also owns online fashion house Yoox Net-a-Porter.
Alibaba and Richemont backed Farfetch three years ago through a complex tie-up that saw the groups invest $300m (£236m) apiece in Farfetch, plus a further $250m each for a 25pc stake in its Chinese offshoot.
Net-a-Porter founder Dame Natalie Massenet had a three-year stint as co-chair of Farfetch before departing in 2020 following a board shake-up.
Mr Neves retains a 15pc stake in Farfetch but holds 77pc of the voting rights through a dual-class share structure
Credit: Julian Simmonds
Farfetch was valued at $6.3bn when it initially went public in 2018, with shares selling at $20.
Investors were buoyed by booming luxury fashion sales at the time and willing to look past the company’s losses, which stood at £75.7m the year it listed.
Farfetch has a deal to sell Burberry’s clothing around the world and has also teamed up with Gucci to offer a 90-minute delivery service for the Italian fashion house’s clothes and accessories. It sold products worth $1bn over its platforms in the three months to the end of June.
After touching a high of more than $73, Farfetch’s share price has since collapsed to just $1.71 after a series of announcements shook investor confidence. The company is now valued at $581m.
In 2019, more than $2bn was wiped off its market value in a single day after it blindsided investors with a surprise $675m takeover of fashion label New Guards Group, owner of the licence for fashion label Off White, and reported larger-than-expected losses.
Shareholders and analysts accused management of a dramatic shift in strategy from a low-risk, shop front model to a company that owned brands, shops and stock. Hedge funds began heavily shorting its shares.
Mr Neves later defended the rationale for the deal, pointing out that New Guards Group was generating significant income and arguing that the “acid test” for the deal would be “in five years, ten years, not in August, September, October.”
Investors have also expressed concerns about spiralling costs. The company lost $455.6m after tax in the first six months of the year on revenues of $1.1bn.
Bernstein analyst Luca Solca, a longstanding critic, has accused Farfetch of burning cash “too fast”.
Mr Solca told The Telegraph: “The business needs to be restructured and refocused.”
A spokesperson for Farfetch declined to comment.
Shares in Farfetch jumped as much as 20pc in New York following the Telegraph report.
