José Neves resigned as CEO of Farfetch. The decision, effective this Thursday, was communicated to workers via an email informing them that the founder of the first Portuguese DNA unicorn is being replaced by Bom Kim, owner of Coupang, as interim leader of the company. An official company source told Expresso that José Neves also stepped down as president.
The message, to which Expresso had access, reports “important updates” regarding the business (sale of Farfetch to Coupang) and “critical decisions to ensure the future” of the company, which involves “simplifying” to “operating from a position of financial strength” and will mean layoffs.
The focus is on what Farfetch “does best: delivering exceptional experiences for brands, boutiques, FPS customers and customers”. And the new organization, “better structured, will continue to move at speed to unlock the full potential of the online luxury space that Farfetch pioneered,” the message states.
Changes in the next few days
With José Neves, at this stage, Helder Dias, Kelly Kowal, Edward Sabbagh, Sindhura Sarikonda, Tim Stone, Luis Teixeira, Nick Tran and Elizabeth Von Der Goltz also leave the company, which means that many of the company’s workers start to report to new managers.
Messages from other members of the group are circulating on social media reporting changes in the coming days, leaving layoffs implied, but without quantifying them. “We have had several budget discussions with Coupang in recent weeks, and now we are ready to share the design of the new organization”, says one of these messages, attributed to an engineering manager.
In the calendar presented in this communication, “colleagues in Portugal and India will have information about their individual cases tomorrow (Friday)”, those in the United Kingdom and the USA will be informed on Monday, and in Brazil the news should arrive at the end of the month.
“I know it has been difficult and frustrating for everyone, but we are about to close this chapter to start a new one for those who remain”, says this internal communication published on social media.
Looking for fresh capital to enable the continuity of the company he founded, José Neves ended up reaching an agreement for the sale to Coupang in December last year and, at the time, it was announced that he continued to head Farfetch.
“Farfetch Limited and its financial advisors conducted a thorough and extensive process to secure additional liquidity for Farfetch Limited and its subsidiaries. Without this liquidity, Farfetch Limited and its subsidiaries would not have been able to continue in business.” He was Thus, on December 18th, Farfetch announced the agreement with Athena Topcoled by the South Koreans of Coupang to sell the company, with its consequent delisting from the stock exchange.
The deal involves a bridge loan of 500 million dollars (€457 million) from Coupang, considered a kind of Amazon in South Korea, to Farfetch, to be paid with the company’s own capital, while shareholders kept their securities. worth zero.
What changed at Farfetch after the pandemic
In the last results presentation, the unicorn still expected to achieve a positive earnings before tax and interest (EBITDA) margin of up to 1% and reach an adjusted EBITDA of €365 million by 2025.
Coming out of the pandemic benefiting from the increase in online shopping and the reinforced liquidity of populations locked at home, Farfetch would eventually stumble for various reasons, from the post-covid skid, to the exit from Russia, the company’s third largest market, with a 7% share in sales and a growth of 70% per year, alongside the impact of the constraints imposed by the pandemic in China”.
A critical period was experienced between November 6th and 28th, the days in which it announced the presentation of third quarter results for November 29th and then canceled this presentation, retreating into silence.
The truth is that the diversification of the business dictated by the ambition of rapid growth, from the market, to the store with online departments, physical retailer, technology company and brand owner, was being pointed out by analysts as a problem that would have to be solved with “focus on one core”.