The first time Michael Kliger ever used Mr Porter, he recalls clicking “proceed to purchase” with extremely mixed feelings. That purchase, he says, “was the Gucci Ace sneaker. I wanted the watersnake.” Kliger’s problem was not with Mr Porter’s service, delivery, or his desired product: “It was that I felt ashamed we did not have them on Mytheresa.”
The Ace dropped in 2016, the year after Kliger was appointed CEO of Mytheresa. Back then, the Munich-founded boutique-turned-online store was a still-emerging upstart in the landscape of luxury multi-brand e-commerce, while Mr Porter was part of one of the sector’s biggest beasts. In 2015, Richemont merged Yoox and Net-a-Porter, before May 2018, when it acquired full ownership of what was then called YNAP for €2.7 billion, a deal that valued the group at around €5 billion.
Mytheresa’s acquisition of Yoox Net-a-Porter will close on 23 April. We lay out the key priorities for the newly-formed parent company.
But seven years is a long time in luxury. Aughts-etail’s other apex players, Farfetch and Matches, have since fallen from contention. And last month, regulators approved the 2024 agreement that saw Mytheresa acquire YNAP from Richemont with a cash position of €555 million and a revolving credit facility of €100 million. In exchange, Richemont received 33 per cent of shares in the resulting entity’s newly named parent company, LuxExperience. Which leaves Kliger, the group’s CEO, in overall command of the e-tailer from which he once reluctantly purchased those sneakers.
Now, it’s time to step on. In an investor presentation last Thursday, Kliger laid out LuxExperience’s medium-term objectives: reach €4 billion in combined sales (up from €3 billion) and an EBITDA of €300 million. So what will it take to reach those healthy-sounding metrics? Speaking via video call, Kliger says: “It’s open-heart surgery. But if you have the right doctor, success rates nowadays are pretty high.”
The operation is already underway, on both the front and backend. The recently acquired part of LuxExperience falls broadly into two categories: Net-a-Porter and Mr Porter are in-season luxury, while The Outnet and Yoox are out-of-season and off-price. Kliger’s first order of business is to disentangle them.
“We are addressing what we believe is one of the root causes of the business’s struggles, which is that they tried to create a backend infrastructure that would serve luxury and off-price at the same time, and with the same solutions,” he explains. “[We believed] one of those two would suffer: either luxury would not get the quality, or off-price would not get the frugal solutions it needs, operating at lower margins and a lower basket size. And that’s exactly what happened.” Which is why Net-a-Porter and Mr Porter’s storefront management and operations will be integrated within Mytheresa’s existing platform, while The Outnet and Yoox will become detached in order to trade through their own distinct technological infrastructure.
That backend transformation is the “open-heart surgery” Kliger was referring to; he concedes it will take time to take effect. Yet, LuxExperience is already anticipating the opportunities it will afford by decentralising management, appointing new leadership and working to transform workplace philosophy. He says, “I found the structures not very entrepreneurial. So we have to hand decision-making back to the brands and not to the HQ.”
Self-determination is being restored on both the luxury and the off-price sides of the business. A flurry of leadership announcements this month saw Net veteran and former Mytheresa North America president Heather Kaminetsky appointed as CEO of Net-a-Porter. Mr Porter’s former CEO, Toby Bateman, and former brand director Jeremy Langmead, the menswear brand’s chief protagonists during its double-monk-strapped glory years, have been reappointed to their former roles following five-year absences.
Kliger recounts that on last week’s LuxExperience investor call, he was repeatedly asked: “Whether we want to bring back the old guard to make it look like how it once was. But that’s not the intention.” He adds, “Because there is no way we can go back. The world has changed. However, what I do want to bring back is the spirit… I want this to be a signal; let’s be entrepreneurs again, and let’s act like we own this business. Everyone [in the business] should act as if you’re not spending someone else’s money, you’re spending your own money — and if it’s your own money, you make sure that it is something the customer appreciates, not someone internally. That liberating principle of ‘customer first’ and acting as an entrepreneur is what these people represent.”
Despite the changes ahead, Kliger says there is a wellspring of passion and expertise in the acquired business that he is keen to harness and nurture. “There are people who really love the business. Who say: ‘I was here when Natalie [Massenet] or Federico [Marchetti] were here, and it was the greatest fun, and I am emotionally attached — and you don’t go just because we’ve had a few bad years.’ Even though I expected that, I was still positively surprised by its extent,” Kliger shares.
Kliger anticipates that the streamlining ahead will require an investment of up to €250 million. “And we believe there are further losses of €100-€150 million to be endured,” he adds. However, Kliger stresses that the company has €600 million in cash and access to a further €175 million. “This was the key message to the investors… We believe we can fix it. We have what it takes. And this is a two to three-year journey.”
Despite a dip in US consumer spending, CEO Michael Kliger — now leading the newly formed LuxExperience — is optimistic about its post-YNAP acquisition future.
This June and September, during the upcoming menswear and womenswear show seasons, the buying teams from Mytheresa, Net-a-Porter and Mr Porter will for the first time be in competition but also cousins in the same concern. Is Kliger concerned about this competition from within leading to a cannibalisation of market share? “No. I’m a big fan of free markets. I don’t believe central planning has ever achieved good results. So my main message has been ‘go out there’. Because the market is not around this table, it’s out there,” he tells me. “We currently have a combined revenue of €3 billion, and the market is currently €70 billion. There are many customers out there that haven’t discovered us.” He adds that Mytheresa, Net-a-Porter and Mr Porter currently have a customer overlap of 10 per cent. The business has four million active customers (who have shopped within the last 12 months), and a further two million who are deemed ‘inactive’ but have purchased within the last three years.
The off-price brands, Yoox and The Outnet, represent an additional challenge. “The bigger loss sits with off-price as opposed to luxury,” says Kliger, “but we believe in these brands, and their future, and we aren’t giving up on them.” Mirko Nobili, former COO of YNAP, has been appointed CEO of Yoox, while Sabah Naqushbandi continues to lead The Outnet as managing director. Kliger says: “You know, the Yoox offer and The Outnet offer are maybe more zeitgeist than we think, because the younger generation is driven by discovery. And if you find something you love on Yoox, you can often be sure you aren’t going to find it elsewhere.” Added to that is Kliger’s suspicion that Yoox in particular has been left unloved. “I think they forgot to invest in the brand. We did some brand awareness analysis, and it was shocking — in Italy, Zalando currently has a higher brand awareness than Yoox.”
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Under Kliger’s leadership, LuxExperience has completed its acquisition of the YNAP brands while laying out its medium-term strategy for their renovation. But then what? “The vision is the same that we had for the standalone business at Mytheresa. What I really want to build or create or strengthen is that these are communities. For instance, Mr Porter is a community for gentlemen with great taste and a love for culture, lifestyle and fashion. This is how it started… So if we are successful, we will have created quite sharp, differentiated communities — and that’s the fun and the joy of shopping,” says Kliger. And does this vision explain the use of the word “experience” in this new e-tail conglomerate’s name? Through the screen, Kliger smiles and replies: “Exactly.”
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