Farfetch’s year-on-year sales decline continued in the final quarter of 2022 as the luxury e-commerce firm faced sustained geographic challenges in Russia and China. But the company expects new partnerships will help sales grow more than 10 percent in 2023, and reach as high as $10 billion by 2025.

In the fourth quarter of 2022, gross merchandise value — a measure of goods primarily sold through its online luxury marketplace — dropped nearly 12 percent year-over-year to $1.1 billion. Revenue also fell 5 percent to $629 million during the same period. (Farfetch posted its first sales drop as a public company in the third quarter of 2022). The strong dollar played a role in the decline — GMV would have risen 2 percent for the full year minus currency fluctuations.

Still, the less-than-stellar results in the final quarter of 2022 were above the company and analysts’ estimates, giving investors confidence that a roundabout is in store. Farfetch’s stock price was up as much as 11 percent in after-hours trading.

The company said its fourth quarter sales were negatively impacted by it closing off its business in Russia, where it lost around 100,000 customers when it exited the market following the country’s invasion of Ukraine in February 2022, and slower demand in China due to pandemic-related lockdowns. Those struggles have continued in the first quarter of this year.

But Farfetch is hoping for a turnaround in the second half of 2023, which will be bolstered by a rebound in China and new partnerships with companies like Reebok, Ferragamo and Neiman Marcus. Company executives said they estimate these partnerships will help GMV grow as much as 19 percent to $4.9 billion in 2023.

Farfetch reported $35 million in adjusted EBITDA losses in the fourth quarter of 2022 and is hoping its headcount reduction and office closures in 2022 will shave off around $85 million in costs in 2023. Farfetch expects its EBITDA margin to reach as high as 3 percent for 2023, up from a nearly 5 percent decline in 2022. As well, the company announced chief financial officer Elliot Jordan will step down by the year’s end after an eight-year tenure.

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Farfetch Reports Rare Drop in Online Sales

The strong dollar worked against the luxury marketplace, which has struggled to grow as consumers return to physical stores.