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Leading luxury goods manufacturer Compagnie Financiere Richemont is in talks with investors to offload stakes in Yoox Net-a-Porter (YNAP), as the online distributor continues to rake in losses.
According to reports, in addition to the outright sale of YNAP, the luxury goods holding is also considering a capital raise of $100 million to bolster the operations of the online distributor.
In its 2021 financial year, which ended on March 31, Richemont reported $233 million in losses from its various online distributors, which include YNAP. Since 2019, the online distribution segment has accrued significant losses amounting to $464 million for the Swiss holding.
The decision to offload stakes in YNAP came after the company’s sales growth and revenue began to lag behind Farfetch and other competitor platforms.
Farfetch’s recent success is attributed to its unique business model, whereby it does not hold any inventory but rather charges a percentage of sales from the boutiques on its platform. As a result, its revenue increased sharply from $602 million to $1.67 billion between 2018 and 2020.
Meanwhile, its backend technology solutions are also becoming increasingly popular with brands that wish to integrate their stock across e-commerce platforms.
In reaction to YNAP’s recent poor financial performance followed by its one-time strong position on the market, Richemont invested $300 million in Farfetch and launched a joint venture with Alibaba under the Alibaba Tmall Luxury Pavilion.
To date, its Alibaba partnership has led to 11 flagship stores operating on the pavilion.
At the time of writing, shares in Richemont were trading at CHF108.35, 60-basis points lower than its opening price this morning.
Together with his family investment vehicle Cie. Financiere Rupert, South African billionaire Johann Rupert holds 0.5 percent of the luxury goods company’s ordinary shares.
Aside from founding Richemont, Rupert is also chairman of the Swiss holding.
