Online Luxury Giant Farfetch Agrees to Buy Stake in Rival
Online luxury marketplace Farfetch Ltd. agreed to take a significant stake in rival e-commerce platform Yoox Net-a-Porter Group SpA, consolidating a lead it has built in digital luxury sales.
Farfetch said it agreed to buy 47.5% of YNAP from Compagnie Financière Richemont SA, the owner of luxury jewelry lines such as Cartier, with an option to buy the remainder of Richemont’s stake. As part of the deal, Richemont said it had also sold a 3.2% stake in YNAP to Symphony Global LLC, an Emirati investment company.
Under Wednesday’s deal, which is expected to be completed by the end of next year, Richemont and YNAP said they would adopt Farfetch technology as they seek to increase online sales.
Farfetch’s shares were up 18% at $9.30 in Wednesday morning trading.
The online market for luxury goods is still relatively undeveloped compared with e-commerce in general, although it is growing rapidly. The share of luxury retail sales occurring online increased from around 12% in 2019 to 22% last year, according to consulting firm Bain & Co. A majority of sales take place on multibrand platforms such as Farfetch as opposed to individual brands selling via their own dedicated websites.
New York-listed Farfetch operates an online marketplace where hundreds of luxury brands sell products to consumers. Farfetch takes a commission on each sale. Its revenues grew by over a third last year to $2.3 billion, though its shares have performed poorly over the past two years, shedding almost 90% of their value. The company hasn’t increased sales volumes as rapidly as investors would have liked, according to analysts. Its move into physical retail through a $200 million investment in Neiman Marcus Group earlier this year also drew a negative reaction from some investors.
Even so, Farfetch’s marketplace model was profitable last year, in contrast with the loss-making YNAP whose websites—which include net-a-porter.com—use a more traditional wholesale model, typically acquiring stock from brands and selling it on to consumers. It launched a Farfetch-style marketplace earlier this year.
Richemont acquired YNAP in 2018, three years after its formation through the merger of luxury platforms Yoox and Net-a-Porter. At that time it valued YNAP at around 5 billion euros, equivalent to about $5 billion. Wednesday’s deal valued it at closer to €1 billion.
Richemont, whose core business centers around high-end jewelry brands such as Cartier and Van Cleef & Arpels, struggled to stem losses at YNAP, creating friction between Richemont’s chairman and controlling stakeholder
Johann Rupert
and some Richemont investors.
Earlier this month, Mr. Rupert wrote to Richemont shareholders urging them to reject a proposal by activist fund manager Bluebell Capital Partners Ltd. to appoint a former
LVMH Moët Hennessy Louis Vuitton SE
executive to its board. The announcement of the Farfetch deal comes ahead of Richemont’s annual general meeting on Sept. 7 and could help Mr. Rupert counter Bluebell’s claims that the company has been moving too slowly with its restructuring plans, analysts said.
As part of the deal, Richemont will receive roughly 12% to 13% of Farfetch’s issued shares, in exchange for the 47.5% YNAP stake, the companies said. Farfetch is also due to give Richement a further $250 million-worth of its shares five years after the deal’s completion. Richemont said Wednesday it would book a €2.7 billion charge relating to YNAP.
Richemont and Farfetch first said in 2021 that they were discussing a possible deal involving YNAP, with Richemont having invested $550 million in Farfetch the year before.
Write to Trefor Moss at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Online luxury marketplace Farfetch Ltd. agreed to take a significant stake in rival e-commerce platform Yoox Net-a-Porter Group SpA, consolidating a lead it has built in digital luxury sales.
Farfetch said it agreed to buy 47.5% of YNAP from Compagnie Financière Richemont SA, the owner of luxury jewelry lines such as Cartier, with an option to buy the remainder of Richemont’s stake. As part of the deal, Richemont said it had also sold a 3.2% stake in YNAP to Symphony Global LLC, an Emirati investment company.
Under Wednesday’s deal, which is expected to be completed by the end of next year, Richemont and YNAP said they would adopt Farfetch technology as they seek to increase online sales.
Farfetch’s shares were up 18% at $9.30 in Wednesday morning trading.
The online market for luxury goods is still relatively undeveloped compared with e-commerce in general, although it is growing rapidly. The share of luxury retail sales occurring online increased from around 12% in 2019 to 22% last year, according to consulting firm Bain & Co. A majority of sales take place on multibrand platforms such as Farfetch as opposed to individual brands selling via their own dedicated websites.
New York-listed Farfetch operates an online marketplace where hundreds of luxury brands sell products to consumers. Farfetch takes a commission on each sale. Its revenues grew by over a third last year to $2.3 billion, though its shares have performed poorly over the past two years, shedding almost 90% of their value. The company hasn’t increased sales volumes as rapidly as investors would have liked, according to analysts. Its move into physical retail through a $200 million investment in Neiman Marcus Group earlier this year also drew a negative reaction from some investors.
Even so, Farfetch’s marketplace model was profitable last year, in contrast with the loss-making YNAP whose websites—which include net-a-porter.com—use a more traditional wholesale model, typically acquiring stock from brands and selling it on to consumers. It launched a Farfetch-style marketplace earlier this year.
Richemont acquired YNAP in 2018, three years after its formation through the merger of luxury platforms Yoox and Net-a-Porter. At that time it valued YNAP at around 5 billion euros, equivalent to about $5 billion. Wednesday’s deal valued it at closer to €1 billion.
Richemont, whose core business centers around high-end jewelry brands such as Cartier and Van Cleef & Arpels, struggled to stem losses at YNAP, creating friction between Richemont’s chairman and controlling stakeholder
Johann Rupert
and some Richemont investors.
Earlier this month, Mr. Rupert wrote to Richemont shareholders urging them to reject a proposal by activist fund manager Bluebell Capital Partners Ltd. to appoint a former
LVMH Moët Hennessy Louis Vuitton SE
executive to its board. The announcement of the Farfetch deal comes ahead of Richemont’s annual general meeting on Sept. 7 and could help Mr. Rupert counter Bluebell’s claims that the company has been moving too slowly with its restructuring plans, analysts said.
As part of the deal, Richemont will receive roughly 12% to 13% of Farfetch’s issued shares, in exchange for the 47.5% YNAP stake, the companies said. Farfetch is also due to give Richement a further $250 million-worth of its shares five years after the deal’s completion. Richemont said Wednesday it would book a €2.7 billion charge relating to YNAP.
Richemont and Farfetch first said in 2021 that they were discussing a possible deal involving YNAP, with Richemont having invested $550 million in Farfetch the year before.
Write to Trefor Moss at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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