Investor Update

Nov 6, 2020

Ladies and gentlemen, thank you for standing by and welcome to the Farfetch Luxury New Retail Conference Call. This time, all participant lines are in a listen only mode. I would now like to hand the conference over to your speaker today, Alice Ryder, Vice President of Investor Relations. Thank you. Please go ahead. Thank you. Hello, and welcome to Farfetch's Luxury New Retail Conference Call. Before we begin, we would like to remind you that our discussions today will include forward looking statements. Actual results could differ materially from those indicated in the forward statements and forward looking statements made today speak only to our expectations as of today. We undertake no obligation to publicly update or revise them. For a discussion of some of the important risk factors that could cause actual results to differ, please see the Risk Factors section of our Form 20 F filed with the SEC on March 11, 2020 and in Exhibit 99.2 to our Form 6 ks filed with the SEC on April 27, 2020. I also want to remind everyone that we will be speaking to you again next Thursday, November 12, when we publish our Q3 results. And as such, we'll not be discussing our Q3 performance on this call. And now, I'd like to turn the call over to Jose Neves, our Founder, Chairman and Chief Executive Officer. Thank you, Alice. Hello, everyone, and thank you for joining us today. With me this morning is Elliot Chardon, Farfetch's Chief Financial Officer and Judy Liu, Managing Director of Greater China. Together, we will talk you through the strategic global partnership with Alibaba and Richemont announced last night. I will outline the strategic rationale for the partnership. Judy will talk in a bit more detail about what this means for our business in China. And Elliot will explain the terms of the deal and its financial impact on the business. Then we will take as many of your questions as we can. Our mission is to be the global platform for the luxury industry. And I'm excited to discuss yesterday's announcement, which will accelerate our ability to deliver on this vision. So, to begin, there are 3 key paths to the announcement. First, a global partnership to digitize the global luxury industry, which we call Luxury New Retail. 2nd, a new joint venture for China, a step change in our China strategy. And 3rd, underpinning the 2 strategic initiatives above, a combined total $1,150,000,000 investment in Farfetch from Alibaba, Richemont and Artemis. Let me briefly say something about each of these. First, the partnership we announced yesterday is a global partnership, which extends beyond China. I want to make it clear that it is not a new strategy for Farfetch, but it is indeed an acceleration of our strategy that has been long in the making. When I first met Daniel Zhang, we spent a long time talking about how we saw the world. It was one of the most memorable meetings of my life. We immediately clicked and realized that our 2 companies had a lot of commonality in our vision of the future. Three things were clear to both of us. 1st, we were both technology platforms, not retailers. Our thinking is driven by innovation, going beyond being just marketplaces, we see ourselves as enablers for entire industries to thrive. 2nd, we both believe that we are not in war with physical retail. On the contrary, the biggest opportunity for Alibaba and Farfetch is to enable the revolution of physical retail as innovation partners to the world's best brands and retailers. Chekma coined this as new retail in 2016. That same year of 2016, Farfetch invited 250 fee levels from the leisure industry to an event called Farfetch OS. There, I laid out our vision. We coined it augmented retail. What clicked in my meeting with Daniel is that we both saw that the biggest opportunity for the next 10 years in luxury is powering the convergence of physical and digital retail. This is what we have decided to coin as luxury new retail. 3rd, both companies know what it takes to win in online luxury in China. We both successfully launched luxury marketplaces that we believe are leading the online luxury paradigm shift in China. With our models, luxury brands connect directly to Chinese customers via our marketplaces in a model that benefits everyone, brands and consumers with strong network effects. It was clear after that meeting that we had in front of us not just the opportunity to create a winning online luxury alliance in China, but to go even beyond and power the global digitization of luxury. Naturally, conversations extended to Richemont, who have a very successful partnership with Alibaba in China. I also shared this vision with Francois Rippinon, and it became clear that this was not only a technology, but a movement that the leading luxury Maisons would enthusiastically endorse and one that we, of course, want in the future to expand this strategy to all other luxury groups, as well as smaller designers and luxury retailers alike. I was very honored to spend many hours with Johan Rupert and learn from him, not just about luxury excellence, but also about his own vision. No one in luxury has been bolder and more visionary than Johan, who early on saw the online opportunity and invested unwaveringly in this vision, eventually building Wynette, who together with Farfetch, lead as multi brand online luxury destinations globally. Johan, Daniel, Francois Henri and myself all share this vision of complete convergence of physical and digital technologies that we call luxury new retail. And we also share a sense of urgency. In the COVID-nineteen and even post COVID-nineteen world, to have global omnichannel capabilities extending to China will be vital for all luxury brands and retailers. The future needs to materialize now. But let me be crystal clear, leisure and new retail is not only a strategy. It is a suite of products and technologies powered by Farfetch that we spent 5 years building and is ready to go to market. Following the Farfetch OS event in 2016, we announced an exclusive partnership with Chanel, and we launched the 1st Star of the Future at Chanel's global flagship store in Rue Cambon in Paris in June 2019. This launch was extraordinarily successful and we are working on rolling out to other Chanel boutiques. In September, our Chanel exclusivity lapsed, which means we now advance to the next stage of Store of the Future. By the end of the year, we will launch version 2 of Store of the Future with the relocation of 50 year old Brown's iconic boutique in London, where we will showcase the latest advances we've made in connecting physical retail to digital platforms. Luxury New Retail, therefore, combines Farfetch's leading suite of platform products and technologies, including the Farfetch Marketplace, Farfetch Platform Solution capabilities, and Star of the Future. With the leading edge expertise Alibaba possesses in the areas of omni channel and in store technologies. The Luxury New Retail vision is to enable leading luxury brands with 1 single partner and integration to achieve a global omnichannel presence via their own mono brand destination, connected retail stores and presence in the world's largest online luxury destinations, Farfetch's Marketplace and Tmall's Luxury Pavilion. Let's move now to the China element of our partnership announced today. China was already the most strategic market for luxury before COVID-nineteen. Chinese consumers represented 35% of luxury in 2019 and were expected to represent half by 2025. But with COVID-nineteen, this is accelerating. Not only that, 70% of Chinese consumption in 2019 was done while traveling, representing a staggering $70,000,000,000 in luxury purchases. With COVID-nineteen and the collapse of international travel, we're seeing a repatriation of this demand. And we believe that digital channels will take the lion's share of this $70,000,000,000 latent demand, given how vast China is and how underdeveloped the physical store networks are in China for most luxury brands. Today, Farfetch step changes its already incredibly successful China strategy by partnering with Alibaba's Tmall and creating a new joint venture with Alibaba and Richemont for the Chinese market. We will launch on Tmall Luxury Pavilion and Luxury SoHo, China's premier luxury and luxury outlet destinations within the Tmall marketplace, as well as Alibaba's cross border marketplace, Tmall Global. The new channels expand the reach of Farfetch's global luxury platform. Luxury labels will be able to elevate their brand awareness, while also significantly expanding their addressable market of luxury consumers through their participation on Prafetch's global marketplace. I will let Judy walk you through what this means for our China strategy and also what's in it for the Chinese consumer. Finally, the third element of today's announcement is the $1,150,000,000 combined investment that underpins the strategic initiatives both globally and in China, which Elliot will walk you through. We know it's a lot to be announcing in one go, but this is a major step in our mission to connect the curators, creators and consumers of the luxury fashion industry. Farfetch's strategy has always been to be the global platform for the luxury industry. We are offering a transformative vision for the industry at a time when so much has changed because of lockdowns and the collapse in international travel. And now, I'd like to hand over to Judy Liu, our Managing Director of Greater China. Judy? Thank you, Zhu Zeng. Hi, everyone. I'm pleased to be with you today and to give you a clear view about Farfetch in China. Before starting, please let me share a bit of my background. I'm a Chinese entrepreneur with more than 15 years of experience in the Internet and Lecture Industries. In 2011, I was the Vice President of the joint venture between the U. S. Company Groupon and Tencent. During that time, I successfully launched the business across China, overseeing the opening of 14 physical offices in just 6 months and leading to the IPO. I had a chance to observe the creation and the growth of WeChat and saw the massive opportunity in the online lecture industry. And that's why I founded Curiosity China, which quickly became a market leader in digital marketing and tech solutions for luxury brands. I was actually already an earlier stage customer of Farfetch. In 2018, I had a chance to have a close look at the Farfetch business and met with Jose and the management team. I was impressed and even more excited of the potential of Farfetch in China. Following the acquisition of Curiosity, I then became the management director for this key market. Today, we have a very successful business in China. Farfetch Engine China in 2015, we have 5 years of experience operating in the market. The Farfetch China team has more than 4 50 members and top management with strong local market expertise. We are one of the few Western e commerce companies who are succeeding in China. This is evidenced by the fact that China is Farfetch's 2nd largest market and is continuing to be the growth driver of our global business. So the key drivers of our success in China are our ability to attract valuable customers and to the bespoke and engaging experience we deliver for them. Let me share what makes our customers so valuable. First, they are young, around 5 years younger than average compared to our other markets. And as we always say in the industry, whoever owns the young generation in luxury owns the future. And these young customers in China also have really high spending power. Our average order value is around $7.20 that's 30% more than average global Farfetch customer. And around 1 of the third of the China GMV comes from our private client. These customers are really sticky too. Our private client customers typically visit us more than once a day and they order nearly once a week. So, part of the reason they come to us is that we make it very easy to do so. China is a mobile obsessed society. Today around 75% of our China region JTV comes from mobile and China mainland is even higher and the shares has continued to grow strongly, much higher than our global average, which is about 50%. And of course, we are driving growth in many ways. What I want to share with you here are some of the most important ones. First, Farfetch has real expertise in global performance marketing, but for China, we have built a full scale demand generation team on the ground and a whole local strategy with a focus on mobile. For us, the KPIs that matter are based on app downloads and lifetime value rather than short term return by paid search. And our high end customers come to us because we deliver a localized luxury experience. And we have enabled really easy access for this mobile obsessed customers with a dedicated app that helps us to provide a bespoke experience. This really differentiates us from our competition. We are the 1st Western company in our industry to build a dedicated China app with local product experience and a full local infrastructure. And we have recently just launched our brand new iOS 2.0 and Android apps designed to be truly localized for the Chinese customer. But our localized user experience is more than just mobile. It's also about providing seamless operation service by integration. We provide multi channels pre and after sales support, and we do that with real specialist in fashion. These are people we have trained with real fashion and product knowledge. That's another real differentiator. Additionally, border custom in China are extremely complicated. What we have built allowed us to provide stable service and smooth delivery to our customers. Our average delivery time is 2 to 3 days to Hong Kong and 4 to 6 days from around the world to Mainland China. The mechanism for doing this is super complicated and hard to replicate. The result for our customer is super simple and reliable. And finally, we provide established private client service and we are doing it at a scale in China. So in combination, this very user friendly elements really show we do things differently and better. The Farfetch China ecosystem going forward, Farfetch since its entrance to China market in 2015 has successfully navigated the China Chinese e commerce environment with our unique advantage and established our own full coverage ecosystem to serve both luxury customers and our brand partners. Our supply advantage differentiates Farfetch in China. We offer Chinese customers assets to more than 430 ks SKUs across over 3,500 brands from sellers located in more than 50 countries. This creates unique attractiveness to Chinese customer by providing them the access to the latest global fashion that are not immediately available in local markets. Our ecosystem in China empowers Farfetch to be the preferred strategic partner for brands to establish online distribution in China. Both on transaction channels and the demand generation capability to catch the world's largest electric customers. Brands who adopt today Farfetch market econception have access to Farfetch China apps, creates exciting and powerful social commerce presence for luxury brands. Farfetch China's full coverage ecosystem can also help our brand partners to leverage all key media channels to engage with luxury customers wherever they are including Baidu, Dimitaribook and TikTok. Today, we are very excited to introduce important new elements to Farfetch's ecosystem. Farfetch will be launching on Tmall Electric Pavilion and establish exclusive presence as the only multi brand players in Key Lake Soho, KeyMOS electric outlet destination. With this partnership, we will boost our exposure to include the 757,000,000 customers across Alibaba Group. Now, through a single integration on Farfetch, brands will have access to both Farfetch and Tmall, the 2 strongest luxury platform in China. This makes Farfetch the most compelling platform for luxury brands looking to boost their presence in China. As Jose mentioned, we will also partner with Alibaba Group on a new retail development in the luxury industry and hopefully leverage China as a pilot market. By this stage, I hope I have given you a good understanding of why we are so well positioned in this massive market. And now I would like to turn the call over to Elliot. Thanks, Judy, and hello, everyone. I'd now like to take you through the financial aspects of the deal, investments that underpin the strategy and we believe create strong alignment across these new strategic partnerships. There are 3 aspects that in total inject $1,150,000,000 into Farfetch. First, the sale and issue of Farfetch Limited convertible notes totaling $600,000,000 $300,000,000 each to Alibaba and Richemont. The issue of 1,900,000 new Farfetch shares to Artemis for $50,000,000 and thirdly, an investment by Alibaba and Richemont of $250,000,000 each into a newly formed subsidiary in China that will operate The topco investment by each party aligns to the advancement of luxury new retail, which will be powered by the Farfetch platform globally. The investments by Alibaba and Richmond at this level reflects the expectations that Farfetch will continue to drive a market leading position globally as a marketplace and platform for the luxury industry. You will recall that Artemis invested at the IPO and this additional investment today demonstrates their continued belief in the future of Farfetch. The creation of a new subsidiary that operates the Farfetch marketplace in China with part ownership by Alibaba and Richemont of this entity will ensure strong financial alignment to the success of the Farfetch marketplace as the premier multi brand luxury destination in China. With each investment of $250,000,000 we will transfer 12.5% of this entity to Alibaba and to Richemont with Farfetch retaining a majority 75% holding. This investment values $2,000,000,000 To be clear, the new entity will utilize the global Farfetch platform to deliver sales across all Farfetch marketplace consumer channels in the People's Republic of China, the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan. The marketplace channels are the Farfetch app, farfetch. Cn and WeChat and moving forward, the Luxury Pavilion and Luxe SoHo. The China entity will not hold other aspects of the Farfetch platform, including Curiosity China, Stadium Goods, Browns, Farfetch Platform Solutions, Store of the Future, the brand platform NewGuards Group, Luxury New Retail or our global marketplaces. These elements stay within the Farfetch Group outside the new JV. Farfetch is set to become synonymous with Luxury in China. And as Judy has been saying, we will work hard with these new partners to ensure we build a market leading position. The financial terms are as follows: first, dollars 600,000,000 of 0 percent convertible notes due in 2,030 at an initial conversion price of $32.29 which represents a 22% premium to the 30 day VWAP as at 30th October 2020. The second aspect, the $50,000,000 to Artemis for 1,900,000 Class A shares at a price of 26.46p each, being the 30 day then the investment in the JV, the $500,000,000 split equally between Alibaba and Richmond for a combined 25% stake in Farfetch China with an option to increase the holding from 12.5% each to 24.5% each if certain financial targets are met in 3 years from completion. The additional investment will be at the fair market value at the time and Farfetch will continue to retain control and fully consolidate this entity. This provides the $1,150,000,000 total investment in Farfetch. Turning to next steps. Following the announcement yesterday, we will be reorganizing the legal entity structure in the region, creating the China business as described and launching the new channels as part of this partnership. This is expected to complete during 2021 with financial impact from 2022. This means we are not expecting this transaction to materially alter our financial forecast in 2021. Our previously stated goals remain in place and I will update on progress towards those goals once we announce our Q3 2020 results next week. However, these new partnerships and new marketplace channels will become core to our longer term goals, which are growing ahead of the overall online luxury market, creating a leading position in all major luxury markets around the world, powering the luxury industry for all parties, the luxury brands, retailers and of course consumers and lastly, growing our China business to become the largest market for demand across the Farfetch marketplace. So, no material change to numbers in 2021, but as usual, we will include the financial impacts of new initiatives in our quarterly guidance moving forward. I'd now like to turn the call back over to Jose for some final remarks and your questions. Jose? Thank you, Elliot, and thank you to everyone for your attention today. In summary, I hope you agree with us that this partnership is a massive validation of our position as the global platform for luxury. Leveraging each company's respective expertise and extensive reach, the partnership will bring luxury retail to the next generation by seamlessly integrating the digital and physical realms. Our strategy has always been and will continue to be to become the global platform for luxury. Today, we step change and accelerate that same strategy and integrate all of the investments and suite of products we developed over the last 13 years into one single vision for the luxury industry, which we call luxury new retail. So with that, let's turn to your questions. Alice? Great. Thanks, Jose. Your first question, maybe Jose, you can take this one, comes from Louise Singlehurst of Goldman Sachs. And she would be interested in knowing what the opportunities are for Farfetch platform solutions, formerly known as Black and White. Thank you. It's a great question. I think this further differentiates what was already a strong USP of Farfetch Platform Solutions. Farfetch Platform Solutions, as you know, powers the brands or the retailers' own websites, apps, but also includes the Star of the Future suite of products. So it also will power, now that the Chanel exclusivity has lapsed, the integration with deep retail and tags, which we're very, very excited about. And I think what this partnership does is further differentiate Farfetch platform solutions. So I'm really positive and confident that this will attract more brands and more department stores to FPS. And we will continue to advance that business unit as well. Great. Thanks, Jose. Jose, Oliver Chen from Cowen has a question about our existing vendor relationships and would like to know what's ahead in terms of maintaining those and what does this mean for our current suppliers? So first of all, we have an incredible and very, very close relationship with 550 brands who directly sell to consumers via our marketplace. We have relationships with almost all the large luxury groups in the industry. I'm very excited that today this now includes Richemont, who we was one of the very few groups that we did not offer any services. And as Johan said, we will continue conversations to explore ways of working more closely with them. We are in a very, very good position with our brands and our vendors. We have 100 percent retention in terms of our top 100 brands, which speaks of our service levels and the value that we bring to the partnerships. I think this partnership reinforces all of that. And for all the participants in the Farfetch 757,000,000 to the 757,000,000 customers that shop regularly on Tmall and on Luxury Pavilion. So let's not forget that to establish e commerce operations in China is very difficult. It's expensive. Creating specific inventory to be held in China by a third party, the TP model, which is until now what brands had available to them before this partnership is risky, because you are producing inventory that will be shipped to China and will be specific for the Chinese market. And what this does for our brands, regardless of whether they are already on the luxury pavilion or not yet in China at all, it allows their global inventory to be available to these Chinese luxury shoppers. That is extremely, extremely powerful for the vendors, for the brands. And I've received numerous messages from brands, from large luxury groups as well as smaller designers, which is really, really encouraging. Terrific. Maybe Elliott, let's turn it over to you. And if you don't mind, I'd like to just combine 2 questions that we've received. One from Lloyd Walmsley of Deutsche Bank, who's curious about the unit economics in selling on Alibaba versus our own sites in China. And then Eric Sheridan from UBS would also be interested in understanding about the economics and how it works when a customer makes a purchase on Farfetch through Tmall. Thanks, Alice. Yes, absolutely. Good questions as always from Lloyd and Eric. And particularly as Jose was just saying, this recognizes the expansion of the Farfetch marketplace channels in China to now include the 757,000,000 customers that are on the Alibaba platform. And as Judy mentioned before, our existing 1200 sellers from around the world that are currently on the Farfetch marketplace will soon benefit from connections with significantly more active Chinese consumers. A huge opportunity for those sellers on the platform. And the economics and costs associated with GMV on Tmall will be very similar to demand generation costs that we experience on other third party channels. So we will be paying, as would expect, cost in relation to the demand generation that we receive on that channel. So that gives us direct sales within the market at market aligned rates, very competitive rates and of course significant brand awareness to a much larger consumer base being able to drive the Farfetch brand as a luxury destination, not just on Tmall and Luxoho, but also broadly with the China app and Farfetch. Cn. So very pleased with that aspect of it. In terms of sort of Eric's part of this, the flows between the entities. So once the JV is set up, the joint venture will benefit from the tech platform that's been developed by Farfetch as well as the supply from our 1200 existing partners. So that means the JV will pay Farfetch for platform services, for brands and support services at a rate, again, that has been set between the parties. And then the JV, of course, will pay Alibaba for demand generation on Tmall in line with payments and other channels as I've just mentioned. So, the JV will effectively act at an arm's length basis across its parent companies. And of course, we'll detail more of this once we complete the transaction and once we launch and how it will impact on your models. Alice? Terrific. Judy, we have a question that Jason Helfstein from Oppenheimer has about TMOL and maybe you can help answer this question. The question is Tmall already hosted more than 400 luxury brands. What is the brand overlap between Tmall and Farfetch? And if one brand works with both Tmall and Farfetch, how will it manage its channel? Okay. So we sell over 3,500 brands and to have the widest assortment in the industry. So it's normal that there is an overlap that with brands, which has a direct to operator flagship store on Kmall. But nonetheless that what we bring to Chinese customer is actually international assortments of supply. So we will fulfill orders from brand and the boutique store point across 50 countries. As what Jose just mentioned, brands are selling on Tmall, they are asking no need to actually allocate their inventory for the Tmall channel especially, but they can continue to fulfill orders to the Chinese customer from a global stock point. I think that's a fundamental difference. The shops on luxury pavilion today, they actually feel orders. They are local inventory only and this which require brand to allocate inventory to those sales at the beginning of the season. I think today Farfetch has a lot of experience in running our marketplace and in operations with Tmall, we can leverage our strength, including demand generation, merchandising, CRM to benefit to brand. Thanks, Judy. Jose, Stephen Ju from Credit Suisse would like to know why are we working now with Alibaba when brands have historically not wanted to deal with Taobao given prior IP issues? So the feedback we have from brands is a very, very high degree of confidence and comfort around the platform. I think you have proof of this in the brands that are joining the platform, and they are not concerned about these sort of issues. And also, as it's public knowledge, Alibaba is investing massively and is addressing any IP issues on their platform. So we are entirely comfortable on that front. Terrific. And Jose, Doug Anmuth from JPMorgan has a question about the partnership. And what does that mean for our partnerships with JD and with Tencent? Will we continue to hold our Tier 1 button on the JD platform, for example? So I will start with JD, and then I will address the question around Tencent as well. So with JD, we obviously have huge respect for them as a shareholder. And we have, as you know, launched the Starfront on JD roughly 1 year and a half ago. As we have updated quarter after quarter the markets, it did not ramp up as we expected. Both teams on JD and Farfetch worked very hard to optimize channel. But we now have to make a very simple commercial decision and decision in terms of how to best allocate our capital and our resources. And so the decision has been made to focus the teams that were running those star fronts on the new star fronts on T Mobile. So we will be smoothly and orderly be phasing out the star front on the jd.com app. This will be done, obviously, ensuring that the JD customer has a fantastic continues to have a fantastic experience. This will be done in close coordination with JD so that everything is smooth and orderly, and we absolutely protect JD's brand and JD's relationship with their customers. So turning to Tencent and specifically WeChat. So Tencent, as you know, is also a cherished shareholder of Farfetch. On WeChat, we have a very, very strong presence. We power 90 luxury brands on WeChat by our CuriosityChina division. We look forward to continue that business and welcome more brands into that ecosystem as well. And we will continue to develop that channel. So WeChat for us is a fantastic and for all brands in the leisure industry, media channel, a channel that builds traffic, builds brand awareness. And as you would expect, as we receive these brands into our ecosystem, it is important to expose them to where the eyeballs are. And so therefore, in terms of the media landscape, we will continue to work with Tencent, WeChat, but also other media partners, such as Baidu and Weibo and other key components of the entire Chinese ecosystem. Great. Thanks, Jose. Elliot, let's turn back over to you. Geoffroy De Mendez from Bank of America Merrill Lynch is interested in what we plan to do with the proceeds. Yes. Good question. So I mean, as we previously reported, Geoffroy, we are very well capitalized. So this transaction wasn't about raising money to support the cash reserves for the near term or for any specific M and A activity. The transaction is about creating formidable partnerships to develop luxury new retail and to grow the business in China. Judy outlined the massive opportunity that we see there. So that's what this transaction is about, not about the cash. But with that in mind, we did want to create very strong financial alignment between all the parties with a meaningful investment that incentivize all parties to deliver on the goals of the partnership. So, it had to be a substantial investment from our new partners. So, the additional capital that we raise today has no specific use. It will be used over time to support our long term strategy of delivering a global technology platform for the luxury industry and facilitate our continued focus on executing our growth plans and driving towards operational profitability, as you know, which is set for 2021. So it's not about cash, but we do believe this transaction will deliver significant long term value for our shareholders. Alice? Thanks, Elliot. Jose, Sam Lorenz from Aurytes would like to have a little bit more clarity about how we're going to work alongside Alibaba, what's going to get integrated while we're also competing with Richmond or YNAP and whether or not there's any aspirations to merge Farfetch and YNAP offerings down the road? So first, in terms of the partnership with Alibaba, we as we announced, we are going to launch Starfronts on both the Luxury Pavilion, T Luxoho and potentially Tmall Global. And that is very, very exciting as it opens this incredible world of fashion that we have on our platform to 767,000,000 customers on the Alibaba platform. So very exciting with that. At the same time, Alibaba is participating in our luxury new retail initiative, and that brings tremendous value to the partnership. They have incredible expertise in this field, things that in the West, we still take as science fiction, and we're still relatively far away from materializing. Alibaba has this working on the ground. If you look at the Hema Supermarkets, if you look at how they've integrated tens of thousands of independent retailers to one single digital platform, absolutely boosting not only the efficiency of those retailers, but also the personalization for the customer of the shopping experience. All of these insights are invaluable, and we're really, really excited about this. And finally, Alibaba will also nominate 1 director to the Farfetch Board. We really welcome that experience at the Board level. This is not only in terms of luxury new retail and omnichannel, but also in terms of technology in general. It's one of as you know, one of the most formidable technology companies in the world with really cutting edge cloud infrastructure and applications on all fronts. So this is really, really exciting and very valuable to us. In terms of Richemont, as I said before, this is a group that we have no relationships with. We partner with Luxury Brands in so many different ways. We have the Farfetch Marketplace. We have Farfetch platform solutions. We have Star of the Future. We have Curiosity China. So as Johan said today on the call, we just announced a deal. Now it's the time to look at all these services and all the things we can do for the Maisons and how can we work in a more close manner with the group. So it's very, very exciting. We've as you know, we have the Kering group on the platform with all of their brands. We have relationships with Burberry, relationships with the Prada Group. We have LVMH with several brands on their platform, and we're powering via Farfetch platform solutions, some other LVMH brands. And Richemont was a clear gap in this roster of relationships, and we're very excited about the opening of doors that this deal enables. Fantastic. And let's take our final question from Eric Sheridan of UBS Jose. We'd like them to understand a little bit about how the brands have reacted and have they has there been any pushback from them given the Richemont investment? The brands have reacted enthusiastically. I received so many messages, congratulatory messages from brands, both the largest conglomerates, but also smaller designers and smaller retailers. This really is a vision for all, right? So for all participants in the luxury industry. So we both with the marketplace, but FPS, Star of the Future and now the storefronts on Tmall, We really bring more and more value to these relationships with the brands and that is being recognized by everyone. So we're very, very excited on that front as well. Terrific. And with that, I'll just conclude our call and thank everyone for joining us today. We're looking forward to speaking with you next Thursday when we release our Q3 2020 results. Thanks everyone. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.