Going out of fashion

Investors who have watched a few promising online fashion marketplaces flare up and then fizzle out may well take a peep at Farfetch and be reminded of the fragrant Britney Spears’s seminal work Oops! ... I Did It Again.

Farfetch began with the idea of connecting fashion-conscious consumers with high-quality niche brands the world over, so if you fancied a frock from a talented yet little-known seamstress operating out of a yurt on the outskirts of Ulan Bator, this was the website for you.

Unlike Net-a-Porter, Farfetch acted as an intermediary between buyer and brand without the risk and costs of owning any stock, and by the time it listed on the New York Stock Exchange in 2018 it had started licensing its technology to major retailers such as Harrods to sharpen up their online offering.

Its share price took off in the golden age of sofa-based retail during the pandemic, reaching a peak valuation of $24bn in 2021.

However, it struggled to attain profitability and failed to attract the top luxury brands, which preferred to retain control by selling their products themselves.

Farfetch diversified by buying Browns, a real-life fashion boutique, and a suite of fashion brands, but investors remained unconvinced, particularly when it became apparent that founder José Neves was about as keen to relinquish control as an Italian mother-in-law, retaining about 70% of the voting rights with a mere 15% of the equity.

The market capitalisation tumbled from $24bn to $220m as it became apparent that the company was rapidly running out of cash, and if a white knight does not appear sharpish the end is nigh.