South African billionaire Johann Rupert’s Richemont advances discussions to offload stake in loss-making YNAP

Richemont, the Swiss luxury goods group controlled by South African billionaire Johann Rupert, has disclosed that it is in advanced talks to sell off a majority stake in the loss-making online retailer Yoox Net-a-Porter (YNAP).

The recent development puts to bed rumors of a potential $100-million capital raise to bolster the online distributor’s operations, as its sales growth and revenue continue to lag behind competitors.

According to Reuters, Richemont is in “advanced discussions” over the sale of a minority stake in the struggling clothing and accessories business to the online retailer, Farfetch, in a move designed to appease shareholders.

The decision comes days after U.S. hedge fund Third Point Management pressed Richemont to reduce its exposure to loss-making subsidiaries to improve its financial performance and valuation.

The fund and another long-time shareholder, Artisan Partners, believe the luxury goods group has a low valuation compared to competitors such as French luxury goods company LVMH.

The institutional investors believe a major reason is the poor performance of YNAP and the group’s other online distributors.

In its recently concluded 2021 financial year, which ended on March 31, Richemont reported $233 million in losses from its various online distributors, including YNAP.

Since 2019, the online distribution segment has accrued significant losses amounting to $464 million for the Swiss holding.

Investor reactions to Richemont’s decision to offload stakes in YNAP sent the group’s stock price up by 10 percent, lifting Rupert’s net worth above the $10.6-billion mark on Friday.

After a weak share performance in 2020, the stock price of the luxury goods group has increased by more than 66.34 percent since the start of the year.

As a result, Rupert has seen his net worth surge by over $2.63 billion since the beginning of 2021. His current $10.6-billion net worth makes him the 229th richest man in the world, and the second-richest man in Africa behind Aliko Dangote.