The reasons for the sale of YNAP’s activities by Richemont
By Eva Morletto25 août 2022
Last Wednesday's announcement caused quite a stir: Farfetch, the online platform for luxury brands founded in 2008 by Portuguese entrepreneur José Neves, is to acquire a 47.5% stake in YNAP (Yoox Net-A-Porter), the major online fashion retailer that is part of the Richemont galaxy.
Symphony Global, an investment company owned by UAE businessman Mohamed Alabbar, will have a 3.2% stake.
Following the announcement, Richemont's share price rose yesterday by more than 3 points on the Zurich stock exchange. The partnership between Richemont and Farfetch through the sale of a portion of YNAP's share capital is intended to transform the latter into a hybrid company whose objective would be to exploit the Farfetch platform to attract different customer segments.
Today, Farfetch aims to develop hard luxury (jewellery and watches), which currently represents only 3% of the market on the online sales site.
The recent Covid-19 pandemic has had a strong impact on the hard luxury segment, which is highly exposed to the vagaries of the health crisis and shop closures. And unlike other sectors such as high-end cosmetics or perfumery, e-commerce had not managed to compensate for the overall drop in sales in the high jewellery segments. But the trend now seems to be reversing, with growing demand on online platforms, hence Farfetch's interest in developing this sector through the Richemont group's houses.
The agreement will boost the hard luxury offer of Richemont brands thanks to the technology developed by Farfetch. The luxury group's brands will be able to access a new form of market and distribution. And Richemont will finally be able to focus its investments on its brands.
Richemont has adjusted the valuation of YNAP to fit the current market. In exchange for this transaction, the group will receive Farfetch shares, which will align the interests of both companies, as explained in a press release by Johann Rupert, Chairman of the Board of Directors.
The first quarter of 2022 ended on a negative note for YNAP. Despite significant investments by Richemont, its distributors posted an operating loss of over 200 million euros. This fragility was all the more reason to seal the deal with Farfetch. The latter - which also has the Chinese giant Alibaba as a shareholder - recorded a turnover of 2.3 billion euros in 2021.
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