📉 Profit Decline for Coupang in Q3
Seattle-based Coupang reported a Q3 net profit of $70M, or 4 cents per share, down from $91M, or 5 cents per share, in the same period last year. This decline in profit missed analysts' predictions, who had anticipated earnings of just 1 cent per share. Despite the dip in net profit, Coupang outperformed on revenue, reaching $7.87B, exceeding the analyst estimate of $7.76B, according to FactSet. Revenue growth was largely driven by strong domestic sales and customer expansion in South Korea.
🚀 Revenue Grows Despite Excluding Farfetch
Even without contributions from Farfetch, Coupang's revenue surged by 20%, underscoring the resilience of its core operations in South Korea. Farfetch’s acquisition has added strategic value to Coupang’s luxury goods portfolio, especially in markets where upscale fashion continues to draw consumers. The overall 27% revenue growth reflects the increasing popularity of Coupang's offerings, which now span a variety of categories, from essentials to high-end goods.
💼 Farfetch Nearing Break-Even Ahead of Schedule
Farfetch, acquired by Coupang in January 2024, is on a path to break even sooner than anticipated, a key milestone for the online luxury retailer. The company was initially expected to continue spending heavily, but recent results suggest that expenses are lower than anticipated. This shift indicates a potential for quicker financial stabilization for Farfetch, which now benefits from the $500M infusion of capital from Coupang as part of the acquisition deal.
📈 Analysts Remain Optimistic About Coupang's Growth
Analysts remain cautiously optimistic about Coupang's growth, especially in light of its better-than-expected revenue results. While profit margins have dipped, the revenue increase and Farfetch’s promising trajectory signal a balanced long-term outlook. Coupang’s significant investments in expanding its luxury goods category, alongside a robust delivery network in South Korea, are expected to continue driving growth. Experts anticipate that Coupang's diversified revenue sources will ultimately stabilize its earnings in the future.
Will Farfetch become a boost or burden for Coupang?
