Online retailer Farfetch surprised investors and not in a good way when it announced the purchase of Milan-based New Guards Group for $675 million during its August 2019 earnings announcement. The unanticipated purchase signaling a sharp change in business strategy combined with disappointing earnings results caused Farfetch’s stock to plummet 45 percent on the day of the announcement.
Among the brands under the New Guards Group umbrella, Off-White easily stands out as the crown jewel. However, at the time of Farfetch’s announcement, very little information was provided on the length of New Guards Groups contract with Off-White. While the label has been produced by New Guards Group since 2015, Virgil Abloh retains control of the label and licenses the label’s trademarks.
Providing some relief to nervous investors, it turns out Off-White’s licensing agreement with New Guards Group is a long term one. According to Business of Fashion, Abloh’s contract with New Guards Group runs through 2035 and cannot be renegotiated or terminated until 2026.
Farfetch plans to hit the ground running with plans in the months ahead to relaunch the Off-White online store, building it out on its own platform.
Despite the reassuring news, Farfetch’s has had a rough ride on Wall Street since going public in September of last year. After an exuberant opening day with the stock price hitting $27, shares now sit at a dismal $8.50.
Off-White didn’t respond to requests for comment though at the time of the acquisition, a label rep stated, “The New Guards Group transaction with Farfetch will not affect Off-White day-to-day operations as the New Guards Group team will become part of Farfetch. We look forward to our ongoing work together.”