After the collapse of Farfetch and its rescue by Coupang at the end of 2023, several shareholders felt they had been wronged. Two of them are now suing the company, accusing it of misrepresenting the difficulties of its business. New elements have recently been added to the proceedings.

According to The Fashion Law, the plaintiffs Fernando Sulichin and Yuanzhe Fu, in their amended complaint filed with the New York court on June 21, accuse the luxury retail portal of intentionally misleading investors in order to boost its share price. This was despite the fact that Farfetch’s acquisitions had, logically, increased its cash position.

The plaintiffs are now basing this accusation on the fact that Farfetch has opted for a blatant deviation from its business model. From an intermediary that did not hold the stocks, the company bought platforms such as New Guards Group or Stadium Goods without ever, according to the complaint, taking the necessary steps to integrate these offers into the existing platform. The plaintiffs claim that this was a mistake.

They also accuse the former management of having persisted with its acquisition strategy despite lower-than-expected sales, while the explosion in online spending during the health crisis allegedly masked the financial effects of this strategy until the fateful financial year 2023. Management is accused of ignoring internal forecasts, while creating unrealistic public expectations for the company’s growth.

Coupang’s takeover of Farfetch, due to be finalised in 2024, was challenged in January by a group of institutional investors owning more than 50% of the luxury platform. A few weeks later, the founder and CEO of Farfetch, José Neves, was one of several members of the management team to leave following the takeover of the company.

Farfetch shareholders were not the only ones to take umbrage at the takeover. As soon as it was announced, Swiss luxury conglomerate Richemont, which in August 2022 entered into an agreement with Farfetch to sell it its Yoox-Net-A-Porter (YNAP) online luxury goods sales platforms, immediately announced that it was pulling out of the deal, abandoning its plans to sell the business to Farfetch.