Moody's Downgrades Farfetch Credit Rating Amidst Delisting Rumors
Moody's Investors Service has downgraded Farfetch Limited's credit rating, citing concerns over the luxury fashion retailer's recent actions and market conditions. The downgrade, announced on Tuesday, follows Farfetch's cancellation of its scheduled Q3 earnings announcement in October. This move came amidst rumors that the company's founder and CEO, José Neves, was planning to delist Farfetch from the New York Stock Exchange, with investment firm Citadel allegedly involved in the potential delisting. The cancellation of the earnings announcement, along with Farfetch's share price deterioration over the past year, contributed to the downgrade. Moody's has also downgraded Farfetch's probability of default rating and changed its Corporate Family Rating from B3 to Caa2, indicating very high credit risk. The downgrade also reflects broader challenges in the luxury clothing market. Competitors like LVMH and Kering have recently experienced a slowdown in earnings, as consumers cut back on discretionary spending due to soft demand. Moody's downgrade of Farfetch's credit rating signals a significant loss of confidence in the company's financial health. An upgrade is unlikely, and a further downgrade of several notches is likely, given the current market conditions and Farfetch's recent actions. The company will need to address these concerns and improve its financial performance to restore investor confidence.
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