Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Richemont has agreed to sell its struggling digital business Yoox Net-a-Porter to online retailer Mytheresa, drawing a line under a failed venture that has cost the Swiss luxury group billions of euros.
Richemont, the owner of jewellers Cartier and Van Cleef & Arpels, has been searching for a solution to divest Yoox Net-a-Porter after a deal with ecommerce group Farfetch collapsed when the latter was sold and averted bankruptcy in December.
Richemont will transfer the entire share capital of lossmaking YNAP to Mytheresa with a cash position of €555mn and no financial debt, the companies said on Monday.
It will also provide YNAP with a €100mn revolving credit facility. In exchange, Richemont will take a 33 per cent stake in Mytheresa. The transaction is expected to close in the first half of 2025.
“We are pleased to have found such a good home for YNAP,” said Richemont chair Johann Rupert.
Shares in Richemont were steady at SFr132.20, valuing the company at SFr67.1bn (€71.26bn), late Monday morning. Shares have risen 18 per cent this year.
Richemont now expects to write down YNAP’s net assets by another €1.3bn, including the cash. The group will have the right to name one person to Mytheresa’s supervisory board once the transaction closes.
Yoox Net-a-Porter has been plagued by losses and already cost Richemont billions of euros in writedowns. Investors have been pressing the group, which is controlled by South African billionaire Rupert, to sell.
Richemont’s losses from discontinued operations, which mostly stemmed from writing down YNAP, were €1.5bn in the year to March 31, compared with a loss of €3.6bn the year before.
Luxury online retailer Mytheresa was the last interested buyer in the process after private equity firms Bain Capital and Permira dropped out, three people with knowledge of the process said.
However, potential bidders had been nervous about taking on Yoox Net-a-Porter because of its losses, which they said they expected to continue, making valuing the business challenging. “It’s very much a turnaround-type case,” one potential bidder told the Financial Times in April.
The combined group after the deal closes will have a value of about €3bn.
Chief executive Michael Kliger said the objective was to grow the group to €4bn by fiscal year 2029 with “high single-digit adjusted earnings” before interest, taxes, depreciation and amortisation.
“With this transaction, Mytheresa aims to create a pre-eminent, multi-brand, digital, luxury group worldwide,” he said.
Mytheresa has emerged as one of the stronger players in the luxury ecommerce industry following the implosion of rivals Farfetch and Matchesfashion in the past 12 months. The German group, which is listed in New York, has gained customers as other online platforms collapsed, benefiting from its wealthy, high-end client base.
The new group will offer three storefronts for clients: Mytheresa, Net-a-Porter and Mr Porter. Discounters Yoox and The Outnet will be separated out from the luxury division.
YNAP’s “white label” business, which offered online service infrastructure to other brands including those in the Richemont group, will be discontinued.
“I want to stress the enormous value that we see in Mr Porter, Net-a-Porter and also Yoox. These have been pioneers in digital luxury. The brand equity and loyalty is enormous. The back office problems are clear, [but] we believe we have solutions for that,” Kliger said.
Richemont bought Net-a-Porter in 2010 and merged it with Yoox five years later in a fraught deal that led to the departure of Net-a-Porter founder Natalie Massenet. A troubled technology and logistics overhaul then dragged on for years, costing hundreds of millions of euros.
Luxury ecommerce ventures flourished during the easy-money era of record-low interest rates, when investors were willing to pour billions into unprofitable technology companies. These companies also saw an opportunity to get luxury brands that had been slow to embrace digital tools.
However, as brands cut back on wholesale and took control of their online sales channels, ecommerce companies faced a crisis compounded by the end of the pandemic-era’s luxury sales boom.
Read the full article here
