With Online Luxury in Vogue, Richemont Snaps Up Yoox Net-a-Porter -- Update
January 22 2018 - 6:28AM
Dow Jones News
By Matthew Dalton
One of the luxury industry's biggest firms, Compagnie Financière
Richemont SA, is gobbling up Yoox Net-a-Porter SA, one of the
fashion world's most disruptive e-commerce companies.
The deal -- for Richemont to spend up to EUR2.69 billion ($3.3
billion) buying the shares in e-commerce firm Yoox Net-a-Porter, or
YNAP, that it doesn't already own -- isn't large for the Swiss
luxury conglomerate that owns Cartier and many other luxury brands.
But it's a measure of how the shift from brick-and-mortar to online
retailing is spreading to even the most expensive and exclusive
purchases.
YNAP has become a major online marketplace for the luxury
industry in recent years. While major fashion labels have been slow
to establish their own internet retailing operations, YNAP has
filled the vacuum. The London-based company operates its own
websites, such as Yoox.com and Mrporter.com, in addition to
designing websites for luxury brands to sell their wares. It also
runs an extensive logistics operation designed to bring goods
within days to the doors of the industry's well-heeled
customers.
The challenge of reaching affluent clientele in the internet age
is particularly acute in the watch sector, one of Richemont's main
businesses. The company, which owns brands such as Vacheron
Constantin and Piaget and Baume & Mercier, has suffered as
traditional watch retailers falter. Younger consumers increasingly
shop online.
"With this step, we intend to strengthen Richemont's presence
and focus on the digital channel, which is becoming critically
important in meeting luxury consumers' needs," said Richemont
Chairman Johann Rupert.
Richemont's offer for YNAP is worth EUR38 a share, a 25.6%
premium to Friday's closing price. YNAP's shares opened up more
than 20% on Monday. Richemont already owns 24.97% of YNAP's
ordinary shares. It also owns a large block of nonvoting shares,
giving it nearly 50% of YNAP's overall equity.
Revenue at YNAP has surged since the company was created from
the 2015 merger of Italian e-commerce firm Yoox and London-based
Net-a-Porter, which was controlled by Richemont. Revenue topped
EUR1 billion in the first half of last year, up 20%.
The problems facing traditional retail stores have intensified
efforts by the luxury industry to find new ways of reaching
customers. Brands are cutting deals with Chinese e-commerce giants
Alibaba Group Holding Ltd. and JD.com to distribute their wares.
Luxury conglomerate LVMH Möet Hennessy Louis Vuitton has started
its own e-commerce website.
A few companies, such as Swatch Group, have held talks with
Amazon.com Inc., the internet behemoth better known for mass-market
goods. But concerns about counterfeits and diminishing their
brands' exclusivity have stopped the industry from cooperating
extensively with Amazon.
Richemont's move is likely to raise questions among other luxury
brands that have come to rely on YNAP for their e-commerce
operations. The company runs the websites and e-commerce logistics
for an array of companies, such as Armani, Valentino and most of
the brands owned by luxury conglomerate Kering SA -- Saint Laurent,
Bottega Veneta and Balenciaga.
Richemont said YNAP will continue to operate as a separate
business to ensure fair treatment for brands not owned by the Swiss
company.
"Given the lack of interesting acquisition targets up for sale
in their core business of hard luxury, Richemont has decided to put
at work its big cash pile investing into distribution channels,"
said Mario Ortelli, an analyst at Bernstein in London.
Write to Matthew Dalton at Matthew.Dalton@wsj.com
(END) Dow Jones Newswires
January 22, 2018 07:13 ET (12:13 GMT)
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