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Mytheresa has entered into a binding agreement to acquire 100 per cent of Yoox Net-a-Porter (YNAP) from Swiss conglomerate Richemont, the companies confirmed on Monday. It sent the Mytheresa share price up 7.75 per cent on Monday morning while the Richemont price was up 1.1 per cent.
Richemont will sell YNAP with a cash position of €555 million and no financial debt in exchange for a 33 per cent stake in Mytheresa. Richemont will have the right to nominate a member and an observer to the supervisory board of Mytheresa once the deal closes.
“We are pleased to have found such a good home for YNAP,” said Johann Rupert, chairman of Richemont, in a statement on Monday. “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.”
“With this transaction, Mytheresa aims to create a pre-eminent, multi-brand, digital luxury group worldwide,” added Mytheresa chief executive officer Michael Kliger.
“As of today, this creates a €3 billion digital luxury platform. Our last reported revenue is €900 million GMV, Net-a-Porter and Mr Porter combined are €1.2 billion GMV and Yoox The Outnet are €900 million GMV,” Kliger said during a press conference on Monday. “Our aspiration is to grow this platform into a €4 billion business with a high single-digit EBITDA margin [within the next four to five years].” (The €1.2 billion GMV number for Net-a-Porter and Mr Porter is very close to their combined net sales, according to Mytheresa CFO Martin Beer.)
The once crowded luxury e-commerce space has already dramatically thinned out after Farfetch faced a fire sale and Matches fell into administration. Richemont has been mulling a sale of loss-making YNAP for a long time; an original deal to sell it to Farfetch fell through in December 2023. YNAP, presented as “discontinued operations” in Richemont’s earnings, posted sales down 15 per cent at both constant and current exchange in the quarter ending 30 June 2024.
Net-a-Porter and Mr Porter are profitable, with a low single-digit adjusted EBITDA margin, while the off-price division — comprising Yoox and The Outnet — is loss-making, Mytheresa’s Beer told reporters. “We will embark on the journey, and this will be a multi-year journey.”
“We view this as a small positive for Richemont given the company will now be able to focus on its core business in jewellery and watches, and hence is a cleaner equity story from now on,” Barclays European luxury goods analysts wrote in a note. “With the deal, Richemont will retain a stake in the merged entity, allowing it to retain some degree of exposure to the luxury e-commerce market.”
Bernstein luxury goods analyst Luca Solca agrees: “Exiting YNAP seems a double-whammy positive: on the one hand, Richemont can concentrate on its core business; on the other hand, merging YNAP with Mytheresa combines it with the strongest and most focused specialist in the field of multi-brand high-end fashion digital distribution, increasing the prospects of eventual success and profitability.”
According to the statement, the deal entails the integration of YNAP’s luxury division into Mytheresa in the medium-term, to form one group with three distinct storefronts maintaining distinct brand identities: Mytheresa, Net-a-Porter and Mr Porter. The off-price division will be separated from the luxury division.
Pressed by reporters during a press conference on Monday morning if Mytheresa plans to ultimately shut down the off-price business, Kliger replied: “Our intention is that the off-price business is separated from the luxury division. We believe one of the root causes of the struggles and problems has been high complexity. By separating it from the luxury division, we create a much leaner and simpler operating model that allows for higher growth and higher profitability [...].So obviously, there’s no plan to shut it down.”
YNAP’s white-label division will be discontinued once the Richemont maisons’ online stores migrate to their own chosen platforms. “The decision to discontinue white-label has been taken by YNAP and Richemont, independent of this transaction, based on the termination of the transaction with Farfetch so this is already in process and not pending regulatory approval,” Kliger explained.
Mytheresa has defied the odds in the current environment, which has been marred by a luxury downturn. Curation of its assortment, lavishing attention on top clients and tight cost control are among the ingredients of Mytheresa’s secret sauce, according to Bernstein analyst Luca Solca. Under Kliger’s watch, sales went from approximately $130 million in 2014 to €840.9 million in the fiscal year ended 30 June 2024.
“There’s no question that the last 18 months have been extremely tough,” Kliger told reporters. “That toughness has resulted in some players exiting. [But] that toughness has not changed at all the predictions and expectations of how big digital luxury will be. Bain Altagamma predicts that the total market for online luxury will double to about €170 billion by 2030.”
Kliger dismissed concerns that Mytheresa and Net-a-Porter would be chasing the same customers: “To take a bricks-and-mortar analogy, Selfridges and Harrods are in the luxury industry, but they’re clearly 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 separated the teams that are responsible for delivering this differentiated marketing and differentiated customer touchpoints.”
“At a time when top luxury brands are successfully repatriating their online sales, therefore weakening multi-brand distribution, it will be reassuring for mid-size and and niche players that a powerful and luxury-focused online multi-brand leader emerges,” says Bruno-Roland Bernard, professor of finance and luxury economics at Institut Français de la Mode. “Concentration is never good for market efficiency, but in this instance Net-a-Porter was in survival mode.”
Closing of the transaction, which is expected to occur in the first half of calendar year 2025, 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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