Yoox Net-à-porter (YNAP), an online sales site currently controlled by Richemont, must become a neutral platform serving the entire luxury industry. On the occasion of the publication of its delayed half-year results on Friday, the Geneva luxury group clarified the steps in progress to improve the profitability of this sector of activity, which has been recording operational losses for several years.
To do this, Richemont intends to strengthen its partnership with the British e-commerce platform Farfetch, in which it had invested 550 million dollars (495 million francs) last year, thus obtaining 25% of the shares of a new entity, Farfetch China. The ongoing discussions focus on four points: an investment by Farfetch in YNAP as a majority shareholder alongside other investors; YNAP’s use of Farfetch’s solutions to support its transition to a new business model; the integration of Farfetch technologies by Richemont brands to accelerate the development of their online stores; the arrival of the Richemont brands on the Marlet by Farfetch.
“Other industry players and investors have already expressed interest in investing in YNAP. The ultimate goal is to make it a neutral platform, without a majority shareholder. Richemont continues to work with Farfetch towards reaching a definitive agreement,” the group said in a statement. Before specifying that the outcome of the discussions is not guaranteed, that no timetable has been set, nor the amount of the transaction “which would be subject to obtaining authorizations from the antitrust authorities”.
“This is not a reaction to pressure from activist funds”
During a telephone exchange with the media on Friday, the president and majority shareholder of Richemont, the South African billionaire Johann Rupert, recalled that making YNAP a platform open to all players in the sector had always been the group goal: “At a conference in 2015, I invited the rest of the industry to join us, because if we don’t work together, we’re not strong enough.”
He also conceded that mistakes had been made in the past regarding YNAP. To the initial “1P” economic model, where the platform buys stocks from brands to then resell them – which involves significant investments –, Richemont is in the process of adding a “3P” model, in which the site becomes a showcase for products whose brands manage their own stocks, as Amazon offers.
“But these errors led us to develop a partnership with the Chinese platform Alibaba, then Farfetch. We cannot comment further on current discussions or other potential partners.” He specifies, however, that this step “does not constitute a deconsolidation of YNAP, even if it would please some”.
Also asked about the arrival of the activist fund Third Point in the capital of Richemont, revealed this Sunday by the French online media Miss Tweed, Johann Rupert made no comment. He assures, however, that the current discussions concerning YNAP began two years ago, well before Third Point took a stake: “This is not a reaction to pressure from activists.”
Richemont is not for sale
The president also brushed aside once again the persistent rumors of a merger with the French luxury group Kering: “Richemont is not for sale and we are not interested in a merger. We believe in our companies and their performance. Why should we dilute our shareholding when we believe our growth could be better than that of other companies for the foreseeable future?”
Richemont’s announcements regarding YNAP were welcomed by analysts on Friday, as was the group’s half-year result. Between April and September, Richemont saw its turnover increase by 24% at constant exchange rates compared to the reference year 2019, to 8.9 billion euros (9.4 billion francs). The group thus exceeds the expectations of the AWP consensus of 225 million. Operating profit was 1.95 billion and net profit was 1.29 billion.
At 10:50 a.m. on Friday, the Richemont share traded at 133.25 francs, up 8.6% compared to the previous closing price, while the SMI index rose by 0.31% in comparison.