Luxury group Richemont in talks with Farfetch to shed stake in lossmaking Net-a-Porter
Swiss luxury goods group Richemont is in “advanced talks” with the UK’s Farfetch over a deal to sell on its minority stake in the lossmaking Yoox Net-a-Porter (YNAP) online luxury retailer.
It’s a move that is likely to butter up investors that have long been critical of its stake in YNAP, which has lost its market share and missed out on the pandemic boom that many rival online retailers enjoyed.
YNAP’s revenues in the six months to 30 September fell by 15 per cent to €934m, while losses were flat at €141m.
Richemont, which owns brands such as Cartier and Van Cleef & Arpels, said today that it would invite other firms in the industry to work alongside Farfetch to create a “neutral platform” for YNAP.
This platform would have no overall controlling shareholder and participating firms would share the costs of technology investment and marketing it needs to compete in the sector.
Shares in Richemont surged as much as 10 per cent to a record high after the YNAP news, which came alongside the group’s report of forecast-beating first-half results that outperformed the European retail goods sector.
“It’s an early Christmas present for Richemont shareholders,” Kepler Cheuvreux analyst Jon Cox said.
It comes after Richemont made a series of investments in YNAP in an effort to adopt a Farfetch-esque asset-light model and move away from owning its entire inventory to a hybrid structure where some stock is owned by third parties.
But YNAP’s ongoing losses have led to speculation that it was ripe for a sale, and earlier this week it was revealed that activist hedge fund Third Point believed it to be undervalued and had built a stake in Richemont, alongside other shareholders including Artisan Partners, to push for improved performance.
Richemont’s chair and controlling shareholder Johann Rupert told reporters on a call that the potential deal was “not in response to activist pressure at all,” adding that the group had “started this project a long time ago.”
“Maybe some of them were listening and read this accurately so they invested and made money,” Rupert added.