The Farfetch crisis that erupted at the end of the year may be the "Lehman moment" of the luxury industry.
On December 18, luxury e-commerce platform Farfetch announced that it would sell to South Korean e-commerce company Coupang for $500 million to maintain its current operations.
On that day, Farfetch's stock price was only $0.64 per share, down 99% from its peak of $73 per share in 2021. It took less than three years for Farfetch's market cap to fall from a high of $25 billion to $254 million today.
Before the buyer dust settles, Farfetch has run out of cash and BOF predicts it may not last until the end of December. Farfetch's past well-funded partners, Richemont, Alibaba and Emirati entrepreneur Mohamed Alabbar, did not come to its rescue.
Bernstein analysts believe that while the $500 million saved Farfetch from bankruptcy, the company still has about $2.8 billion in financial debt. The operating model of slowing sales, misinvestments, and high debt costs indicates that the Farfetch crisis may have a series of negative effects on downstream boutiques and brands.

Also in December, British luxury e-commerce platform MatchesFashion, once valued at $1 billion, was sold for 53 million pounds, and British department store conglomerate Frasers Group bought it from private equity firm Apax Partners.
According to open data from Matches, the company's losses widened to £23.8m on revenues of £380m in 2022, when luxury spending generally soared. This year should be worse.
Mike Ashley, the boss of Frasers Group, is like a vulture, spotting weak firms to attack. This year, Frasers Group also acquired the troubled British fast fashion e-commerce platform Missguided for £20 million and sold It to Shein, acquired 16.5% of the shares of fast fashion e-commerce Boohoo, and the British niche women's clothing brand I Saw It First. And British menswear brand Gieves & Hawkes, acquired by Shandong Ruyi Group in 2017 for HK $2.215 billion when it acquired a 51.38% stake in Trinity, a company owned by Hong Kong's Fung family.
Still, some are willing to test the waters for a small fee. At the end of December, Swiss private equity firm 1686 Partners, the son of CHANEL's majority shareholder David Wertheimer, has invested £2.5 million in Cult, a British fashion shopping website, along with investors including Morgan Stanley, Fuel Ventures and WomanKind Ventures Mia. This is also his first foray into the e-commerce business.
Luxury e-commerce platforms are not doing well, but fast fashion platforms are relatively strong.

China's fast fashion e-commerce Shein is not significantly affected by the capital market. Shein completed two important acquisitions in 2023, one was the acquisition of a third of Sparc Group, the parent company of American fast fashion women's brand Forever 21, and the other was the acquisition of fast fashion e-commerce Missguided. Shein's much-vaunted two-year U.S. IPO, now valued at $66 billion, was also on the calendar in November. Although the valuation is lower than the $100 billion speculated a year ago, it is still the world's largest IPO in the past two years.
This trend can also be seen in the financial reports of the world's major fast fashion companies, although the growth rate has slowed, but most of the fast fashion giants have achieved double-digit growth. Uniqlo parent Fast Retailing Group's fiscal year 2023 (12 months ending August 31, 2023) revenue increased by 20.2% to 2.77 trillion yen (about 135.3 billion yuan), and Spanish fast fashion brand Mango expects revenue to increase by 12% to 3 billion euros in fiscal year 2023. Inditex Group, the parent company of Zara, recorded sales of 25.6 billion euros in the first nine months of the 2023 fiscal year, an increase of 11.1% year-on-year. Only H&M group saw single-digit growth, with sales in the 2023 fiscal year (12 months to November 30) up 6% to 236 billion Swedish kronor (about 163.9 billion yuan), excluding the impact of the Russian business, up 8%.
Going public at this point is not necessarily a good thing. Birkenstock, a German shoe unit of L Catterton, a private equity firm owned by LVMH Group, was valued at $8.64 billion when it went public on the New York Stock Exchange in November. It closed down 12.6 percent, the worst first-day performance for an IPO valued at $1 billion or more in the last two years.