Wednesday, January 26

Richemont to cede control of Yoox Net-a-Porter through agreement with Farfetch

Richemont is reversing course in an individual effort to build a luxury e-commerce platform and is preparing to relinquish control of Yoox Net-A-Porter through a deal with web purchasing specialist Farfetch.

The move follows reports that activist investor Dan Loeb bought a stake in the owner of Cartier, who has been struggling to turn his business online since taking full control of it three years ago. Richemont shares rose as much as 9.8% on Friday after the company also reported first-half earnings that beat estimates.

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Farfetch, a London-based luxury e-commerce company, is in advanced talks to buy a minority stake in Yoox Net-a-Porter, Richemont said on Friday. The goal is for the unit, known as YNAP, to be a neutral platform with no majority shareholders. Other luxury goods manufacturers will also be invited to join, Vacheron owner Constantin said.

While President Johann Rupert is defusing a possible confrontation with Loeb over YNAP, the Richemont founder said the move is not a response to pressure from activists.

“We’ve been pointing this out for a year,” Rupert said. “It is not activist pressure or anything at all.”

Some brands have been reluctant to join YNAP as the platform is controlled by a competitor. Chief Financial Officer Burkhart Grund said the company is in advanced talks with potential investors other than Farfetch, and Rupert said the company is open to selling stakes to luxury goods rivals. Those talks will take place in the coming months, he said.

Grund told reporters that each shareholder would have less than 50% of YNAP’s voting rights. YNAP also plans to use Farfetch’s technology, and Richemont would put its brands on the rival’s platform.

Not for sale

Separately, Rupert said Richemont has made a “clear statement” that it is not for sale and is not interested in mergers. Analysts have speculated that the Swiss company would make a good partner for Gucci owner Kering SA.

Richemont has already bought a stake in Farfetch’s Chinese business, and a joint venture between the companies and e-commerce giant Alibaba Group Holding began operations in August. When that deal was announced last year, Sanford C. Bernstein analyst Luca Solca said the alliance could be a precursor to Richemont spinning off YNAP and merging it with Farfetch or selling it to Alibaba.

Richemont also said operating profit rose to 1.95 billion euros ($ 2.2 billion) in the six months through September. Analysts expected 1.49 billion euros.

“The post-Covid world is yet to emerge. During the second half of the year, volatility is likely to persist, including in terms of inflation and geopolitical tensions, ”Rupert said in the statement. He also cautioned that the company will face a more difficult basis of comparison.

© 2021 Bloomberg

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