Richemont Strikes Major Deal: YNAP To Acquire By Mytheresa

Hello Folks,

Luxury eCommerce has seen its fair share of shake-ups this year. Firstly, Farfetch was sold to Coupang for a fraction of its value in April after struggling with profitability issues. Then, Flannels (formerly known as Matches) suffered similarly, being purchased by Frasers Group in late 2023 and completely shut down by March. And now, Richemont’s Yoox-Net-a-Porter has also long been a financial drain.

The latest news on this front is that Mytheresa, one of the few luxury eCommerce platforms that has fared well in the past few years announced a deal on Monday to acquire Yoox Net-a-Porter (YNAP) from Richemont. This has sent Mytheresa’s share price up by 7.75 percent and Richemont’s rise by 1.1 percent.

On paper, this deal looks like a win for both sides. Once finalized next year, it will instantly elevate Mytheresa into a $3 billion company, massively boosting its scale and market presence.

Richemont will sell YNAP with a cash position of €555 million and no financial debt in exchange for a 33 percent stake in Mytheresa. As part of the deal, Richemont will also offer YNAP a €100 million credit facility for six years and gain the right to nominate a member and an observer to Mytheresa’s supervisory board once the deal closes.

“We are pleased to have found such a good home for YNAP. As a trusted partner to many of the world’s leading global luxury brands, YNAP is renowned for its pioneering high-end customer services complemented by its distinctive and inspirational editorial voice. Mytheresa is ideally placed to build on YNAP’s assets to further delight customers and brand partners alike across the world by harnessing both companies’ respective strengths” said Johann Rupert, chairman of Richemont.

Further added by Mytheresa chief executive officer Michael Kliger, “With this transaction, Mytheresa aims to create a pre-eminent, multi-brand, digital luxury group worldwide,”

Well, what we think is that one of the biggest challenges for multi-brand online retailers like Farfetch and Net-a-Porter has been their shaky financials.

Farfetch only achieved profitability intermittently starting in 2021 and upset investors with frequent spending, like a surprise $675 million takeover of New Guards Group in 2019. Similarly, Net-a-Porter has been a costly venture for Richemont, losing $137 million in just the first half of 2023.

And that’s one reason, Richemont has been mainly considering selling YNAP for a long time. YNAP presented as “discontinued operations” in Richemont’s reports saw sales down 15 percent at both constant and current exchange in the quarter ending 30 June 2024.

Pressed by reporters during a press conference, Mytheresa addressed speculation about shutting down the off-price business. Instead, the company plans to separate Yoox from Net-a-Porter, forming one group with three distinct storefronts: Mytheresa, Net-a-Porter, and Mr. Porter. This separation will allow Mytheresa to focus on more profitable segments, while Yoox will operate with a “much simpler”, more growth-oriented model.

He also mentioned one important factor in an interview with Glossy, “Success will not come by saving costs,” a strategy taken by many businesses in the luxury space as they feel the pressure to achieve profitability. For example, The RealReal, another luxury online retailer finally turned a profit in April after years of losses by making significant cuts.

And definitely, YNAP’s white-label division will be discontinued once Richemont’s maisons move their online stores to other chosen platforms. He believes Net-a-Porter’s real success will come from delivering “the right assortment to the right customer at the right speed.”

This decision was made jointly by YNAP and Richemont after the termination of the transaction with Farfetch and is already underway. It is separate from the current Mytheresa transaction and doesn’t require regulatory approval.

Kliger also downplayed concerns about Mytheresa and Net-a-Porter competing for the same customers.

“To take a bricks-and-mortar analogy, Selfridges and Harrods are in the luxury industry, but they’re differentiated positions. This is the same for Mytheresa and Net-a-Porter, and therefore they are complementary. They can use the same infrastructure, but they will have different assortments, different marketing, and different customer touchpoints. And thus we will also keep separate the teams that are responsible for delivering this differentiated marketing and differentiated customer touchpoints.”

The deal is expected to close in the first half of 2025 and is subject to customary conditions, including the receipt of antitrust approvals. The transaction is not subject to or conditional on approval by either Richemont or Mytheresa shareholders.

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