LONDON, United Kingdom — Luxury e-commerce player MatchesFashion reported surging revenue and profits for 2017, with results boosted by a US expansion push and increased purchases by the company’s existing customers.
But the pace of growth slowed, a sign of growing competition for luxury spending online.
Revenue rose 44 percent to £293 million ($394 million) for the 2017 fiscal year, while earnings before interest, taxes, depreciation and amortisation grew by 34 percent to £26 million ($35 million). Performance was driven, the company said, by strong results in the US, which became the largest country by revenue, increasing by 54 percent year-on-year.
“Our growth in profitability was driven by the fact we are spending so much time on our existing customer,” who makes up two-thirds of the business, Ulric Jerome, chief executive of MatchesFashion, told BoF.
MatchesFashion, which started as a single boutique in Wimbledon in 1987, has grown into one of the largest luxury sellers online. The company generated 95 percent of its sales online in 2017, with the remainder coming from three stores in the London area. Apax Partners acquired a majority stake last year, in a deal that valued the company at a reported $1 billion.
The company faces stiff competition, including from Yoox Net-a-Porter, now owned by Richemont, and Farfetch, which will reportedly seek a $5 billion valuation in an initial public offering later this year.
MatchesFashion’s pace of growth, though far outpacing luxury spending overall, was down from 61 percent the previous year, and the average order size grew 6 percent to £542 ($729), compared with a 14 percent increase in 2016.
MatchesFashion is positioning itself as a personalised online shopping experience.
“I suspect that this market will be fragmented in the future, as brands won’t want to depend too much on an ‘Amazon-like’ dominating player,” said Luca Solca, head of luxury goods at Exane BNP Paribas. “I expect multi-brand full price luxury digital retail will be a very competitive arena.”
Still, he said MatchesFashion’s 2017 results were “remarkable,” and a sign that online luxury is continuing to outpace physical retail.
While growth in the global luxury market is strong, said Jerome, “penetration is still very low, so the opportunity is huge.” In addition to the US, the Asia-Pacific region, where the company tripled its Hong-Kong office and launched a Korean website, will remain a focus for 2018.
MatchesFashion is positioning itself as a personalised online shopping experience, an attempt to set the company apart from sector leader Net-a-Porter, or Farfetch, a marketplace that is also developing retail technology to sell to partners.
“We’re approaching luxury in a way that it’s all driven by discovery,” Jerome said.
MatchesFashion is using editorial content and features on its website and app to drive more sales online, including The Style Daily, a chatbot that gives recommendations, and The Style Social, which allows users to upload images and interact.
“The more the industry grows, the more the opportunity of online grows, the more the customer wants to have a one-to-one conversation,” Jerome said.
The company is also planning Carlos Place, a townhouse store slated to open in summer 2018. It’s set to launch with two personal shopping and retail floors, and a “creative hub” floor featuring events that will be broadcast to online audiences.
“It’s our vision of what retail is going to be: a combination of retail, culture, broadcast, with the goal to design an opportunity of connecting and inspiring the customer.”