Farfetch leads the IPO price range in the luxury market

PARIS (Reuters) – Farfetch (FTCH.N) listed its shares above its target range on Friday in an introduction to New York that values ​​the online luxury retailer to more than $ 5.8 billion and highlights how online sales have become an advantage for high-end brands.

E-commerce is becoming one of the major growth drivers for luxury brands, initially fearing to dilute their image by selling online.

The London site Farfetch, a 10-year-old site that connects shoppers to hundreds of boutiques and fashion brands, but which has no inventory, is one of the growing multi-brand platforms that quickly entered the market.

Its shares are expected to start trading on the New York Stock Exchange on Friday after the company sets the offer price at its initial public offering at $ 20 per share – exceeding the $ 17 to $ 19 range. already increased.

It will raise $ 885 million from the list, the company having issued 33.6 million new shares and existing shareholders, including donors such as Advent Venture Partners and Vitrurian Partners, for an amount of 10, 6 million.

The Farfetch IPO, founded by Portuguese entrepreneur Jose Neves, stands at $ 5.8 billion depending on the number of shares available in its latest deposits. Including stock options for employees, the amount would reach $ 6.3 billion, the company said.

Existing Farfetch investors include JD.com (JD.O), The second largest e-commerce company in China, which bought additional shares when it was introduced in a private placement.

The introduction comes at a time of increasing competition between independent online fashion retailers and luxury groups that are deploying their e-commerce operations, including cash-rich luxury trucks like Louis Vuitton, owner of LVMH (LVMH.PA), who is experimenting with his own multi-brand website.

Richemont (CFR.S), the Swiss conglomerate owning the jeweler Cartier, this year took control of Yoox Net-A-Porter, its rival now written off Farfetch, in an agreement that valued the platform to 5.3 billion euros.

Farfetch – which never made a profit, but recorded a 59% jump in revenues last year to $ 386 million – attracted investments from industrial initiatives in its IPO, such as the Pinault family who controls Kering (PRTP.PA), the French group behind brands such as Italy Gucci.

To stand out, the platform is investing heavily in technology, including the digital store services it is testing with Chanel, one of Farfetch's big names.

Online sales are expected to account for a quarter of the luxury industry's revenue by 2025, compared with just under 10% currently, according to consulting firm Bain, in part due to the demand from young consumers in technology markets like China.

(1 dollar = 0.8493 euros)