Luxury goods retailer Richemont has sold just over half of its loss-making online retailer YOOX Net-A-Porter (YNAP), a move that comes amid criticism from European activist shareholder Bluebell about that division.
The luxury group chaired by billionaire Johann Rupert said Farfetch, a British-Portuguese online luxury retailer, will buy 47.5% of the fashion retailer and Middle Eastern partner Alabbar will buy 3.2%.
The deal gives Richemont, the owner of brands such as Cartier, Chloe and Piaget, access to Farfetch technology for its online sites. YNAP will no longer have a controlling shareholder.
A put-and-call contract gives Farfetch the obligation to buy the remainder of YNAP in three to five years’ time, if it meets certain earnings targets.
Richemont, which dominates luxury jewellery categories, has invested heavily in YNAP but lost hundreds of millions of euros over the years. On Wednesday, Richemont said it is impairing €2.7bn (R45.6bn) in its YNAP investment.
“Excellent news for Richemont, at last,” Vontobel analyst Jean-Philippe Bertschy told Bloomberg. “The deal closes years of underperformance and heavy investment in YNAP.”
Richemont is dwarfed in the stock market by LVMH, the France-based maker of several of the biggest names in the luxury goods market whose share price has surged nearly threefold over the past five years. Richemont, by contrast, has notched up just 70% — a sign of investor disappointment at the operational performance.
Richemont’s online distributors segment reported an operating loss of €210m for the 12 months ended March 2022, and Richemont announced in November last year that it was in talks about selling a stake in YNAP.
It has signed off on the deal two weeks before its AGM, in which Bluebell wants to elect a shareholder representative.
Bluebell has criticised the share class structure under which Rupert, through B class shares, owns about 10% of the company but has 50% of the voting rights.
Richemont has proposed Wendy Luhabe, now the chair of Pepkor and food producer Libstar, as a representative.
‘Expensive distraction’
Bluebell has proposed Francesco Trapani, former CEO of the Italian jeweller and luxury goods retailer Bulgari.
One of Bluebell’s criticisms has been Richemont’s investment in YNAP, which appears to be an expensive distraction from its core business.
“We would like them to focus on what they are good at, which is hard luxury, jewellery and watches,” Bluebell partner Marco Taricco told Reuters.
Richemont, which is listed on the Swiss stock exchange, has a secondary listing on the JSE, where its shares closed 2.87% higher at R199.75.
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