Richemont is finally exiting Yoox Net-a-Porter, but the price of ridding itself of the loss-making online luxury business is a hefty one.
is finally exiting Yoox Net-a-Porter, but the price of ridding itself of the loss-making online luxury business is a hefty one.
The business will no longer be on Richemont’s balance sheet, ridding it of YNAP’s losses, which have depressed its earnings and valuation. In the year to 31 March 2022, Richemont’s online distributors, led by YNAP, lost €210-million. But these benefits can’t disguise the fact that Richemont’s frequent U-turns on Net-a-Porter — first striking a deal with Yoox Group and then buying the combined company — were not its finest decisions, strategically or financially.To be sure, it’s a feat that Richemont has managed to reach an accord despite a worsening outlook for the luxury industry in both China and the US. Meanwhile, the slump in tech stocks threatened to derail discussions with Farfetch.
In May, Farfetch, which listed in New York in September 2018, cut its outlook after it was hurt by exiting Russia and lockdowns in China. Richemont will also provide it with a $450-million credit facility. Fortunately, the Swiss company will be able to benefit from any upside through its holding in Farfetch.
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