Online High Fashion Retailers Net-A-Porter And Yoox To Merge

Net-A-Porter website

Richemont said Tuesday that it has entered into a binding, conditional agreement to merge the operations of its subsidiary, The Net-A-Porter Group, with Yoox S.p.A. in an all-share transaction.

The agreement is conditional upon the approval of Yoox shareholders at a meeting expected to be held in June. Upon completion of the transaction, the combined entity will be renamed “Yoox Net-A-Porter Group.” It will be incorporated in Italy and listed on the Milan stock exchange. Natalie Massenet, founder and executive chairman of The Net-A-Porter Group, will serve as executive chairman and Federico Marchetti, founder and CEO of Yoox Group, will be CEO of the combined entity.

The combined company is reportedly expected to be valued at more than $2.5 billion.

Richemont said Monday in a statement that it will receive 50 percent of the share capital of the combined company. Its voting rights will be limited to 25 percent. Richemont said it is committed to a lock-up period of three years in respect of shares equivalent to 25 percent of the total share capital of the combined entity. Upon completion, Richemont will appoint two representatives to the combined company board of directors that will have a minimum of 12 members. 

The combined company is expected to have a capitalization of up to 200 million euro ($214.4 million) to fund growth, Richemont said.

Richemont was a minority shareholder of Net-A-Porter in its infancy and became a controlling shareholder in 2010.

“We are proud of Net-A-Porter’s achievements under the leadership of Natalie Massenet, ably assisted by a wonderful team of professionals,” Johann Rupert, Richemont chairman, said in a statement. “Established business models are being increasingly disrupted by the technological giants. It is with this in mind that we believe it is important to increase leadership and size to protect the uniqueness of the luxury industry. The merger of the two leaders will further enhance an independent, neutral platform for a sophisticated clientele looking for luxury brands.”

Yoox is a multi-brand online fashion store launched in 2000 with operations in China, Europe, the U.S. China and Hong Kong. It is listed on the Milan stock exchange. It specializes in selling off-season luxury goods online in its own stores, as well as trendier brands on thecorner.com, and operates the online stores for more than 30 other luxury brands.

In 2012, Yoox partnered with luxury and fashion holding group, Kering, a rival of Richemont, managing the online stores of several luxury brands owned by Kering, including Saint Laurent, Bottega Veneta and Stella McCartney. 

Net-a-Porter has offices in London, New York, Hong Kong and Shanghai. Net-a-Porter’s website sells clothing, jewelry, shoes and other accessories from a variety of top designers and labels, including Alexander McQueen, Dolce & Gabbana and Valentino. It also publishes the magazine Porter, which allows readers to buy featured items.

The transaction, expected to be completed in September 2015, will generate a one-off, non-cash, accounting gain in of approximately 317 million euro for Richemont. 

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Richemont 3Q Jewelry Sales Up 20% and Watch Sales Up 21%

Cie. Financiere Richemont SA said Monday that third-quarter revenue rose 33 percent to 2.1 billion euro ($2.8 billion), led by the acquisition of online fashion retailer Net-a-Porter.com. At constant exchange rates (when currency shifts are removed) revenue grew 23 percent.

By category, the Swiss company’s jewelry business (made up of Cartier, Van Cleef & Arpels), increased by 20 percent at constant exchange rates (30 percent actual exchange rates) to just over 1 billion Euros ($1.45 billion). Watch sales for the period ended December 31, increased 21 percent (30 percent at actual exchange rates) to 543 million Euros ($720 million). The watch business is made up of the following brands: Jaeger-LeCoultre, Piaget, IWC, Baume & Mercier, Vacheron Constantin, Officine Panerai, A. Lange & Söhne and Roger Dubuis.

By far the largest increase to company’s business is in its “Other” category (up 63 percent), which reflects the purchase last year of luxury e-commerce website, Net-a-Porter.

“Richemont’s Maisons performed well and saw good sales growth, particularly at the retail level, during the three-month period,” said Johann Rupert. Richemont executive chairman and Group CEO. “Sales in the month of December grew by 17 percent at constant exchange rates and excluding the impact of the Net-a-Porter acquisition.”

He added, “Higher comparative figures will make the final quarter of the financial year ending 31 March 2011 more challenging Gross margin is anticipated to be negatively affected by a stronger Swiss franc given the Group's Swiss manufacturing base and by the planned changes to product lines at one of the Group's Specialist Watchmakers, which will be largely implemented during the coming quarter.”

In addition to the companies listed, Richemont owns Montblanc, which makes writing instruments, Purdey, the luxury hunting gun maker, and Alfred Dunhill, the London-based maker of leather goods, fashion and lighters, as well as a watch and jewelry joint venture with Ralph Lauren.