Farfetch acquisition weighs on Coupang revenue

Coupang, South Korea’s leading e-commerce platform, has reported its first quarterly loss in two years, as the company grapples with the integration of its recent Farfetch acquisition and a significant regulatory fine. The setback comes despite robust growth in its core online retail business.

The Seoul-based company posted a net loss of 77 million dollars for the second quarter, significantly exceeding analysts’ average estimate of an 11.7 million dollars loss. However, excluding the impact of the Farfetch acquisition and a fine imposed by Korean authorities, Coupang would have reported a net income of approximately 124 million dollars.

“This quarter we continued to see deeper levels of engagement from our customers, powered by our relentless focus on providing even greater levels of selection, service, and savings for customers,” said Gaurav Anand, CFO of Coupang. “We remain focused on creating moments of WOW for our customers every day, while driving continuous improvement across our operations by leveraging our investments in infrastructure, technology, and automation.”

The acquisition of luxury e-commerce platform Farfetch was completed in January 2024 for a reported 3.2 billion dollars. This strategic move aims to diversify Coupang’s offerings and expand its global footprint, particularly in the high-end fashion market. However, the integration of the loss-making Farfetch has weighed on Coupang’s short-term profitability.

Despite these challenges, Coupang’s core business showed resilience, with net revenue increasing by 25 per cent to 7.3 billion dollars. The company, known for pioneering one-day delivery in South Korea, has seen its shares climb about 26 per cent this year, following its first full year of profit in 2023.

Coupang’s Chief Executive Officer, Bom Kim, remains optimistic about the Farfetch acquisition, projecting that the luxury platform will approach positive adjusted EBITDA by the end of 2024, reported Bloomberg. This aligns with the company’s broader strategy of investing heavily in delivery speed and market expansion, including recent forays into Taiwan.