Richemont Lends A Helping Hand For Mytheresa To Acquire Yoox Net-A-Porter – Forbes

SOURCE: Pamela N. Danziger | Forbes

Mytheresa just struck a deal to acquire Yoox Net-A-Porter (YNAP) from luxury powerhouse Richemont, owner of Cartier, Piaget, Chloé, Montblanc and more.

Mytheresa has favorable winds at its back, having overcome the recent downturn in the luxury market by growing annual revenues 10% in fiscal year 2024, including a 14% uptick in the second half of the year.

Richemont is a highly motivated seller since Mytheresa will pay no cash in the deal. Instead, Mytheresa will issue Richemont 33% of Mytheresa’s fully diluted share capital and a board seat while taking on YNAP’s existing $604 million (€555 million) cash balances and no financial debt. Plus Mytheresa will inherit a six-year $110 million (€100 million) revolving credit facility to support YNAP’s corporate needs.

Other terms of the agreement include Richemont’s holdings in Mytheresa will be subject to a one-year lockup following closing, expected in the first quarter 2025. And Richemont expects to write off approximately $1.4 billion (€1.3 billion) in YNAP net assets upon closure of the deal, pending regulatory approval.

Fortunately, Germany-based Mytheresa and Richemont in Switzerland are subject to European regulatory oversight, not the Federal Trade Commission, which is challenging the Tapestry acquisition of Capri Holdings in the luxury market.

Moving over to Mytheresa will be YNAP brands Net-A-Porter and Mr Porter and its off-price Yoox and Outnet platforms. Each brand will maintain separate online storefronts, while backend operations will be combined.

Mytheresa CEO Michael Kliger shared this statement with me via email. “With the acquisition of YNAP we now start an exciting new chapter in our amazing journey. In luxury Mytheresa, Net-A-Porter and Mr Porter will stand for clearly differentiated but complementary multi-brand offerings for luxury customers worldwide based on distinctive assortments, marketing and customer touchpoints.”

And he added, “The off-price business will benefit from the separation from luxury and a much simpler operating model driving growth and profitability.”

Win-Win

It’s a win-win for both companies. Richemont has been losing money on YNAP for years after acquiring it in 2018.

YNAP revenues were down 14% last year from $2.8 billion (€2.5 billion) in 2023 to $2.4 billion (€2.2 billion) in 2024 under “discontinued operations.” It also wrote down $1.4 billion (€$1.3 billion) in YNAP net assets last year. It’s plans to sell YNAP to online multi-brand competitor Farfetch tanked last December.

Mytheresa will instantly more than double in size, adding some $2.3 billion in YNAP’s gross merchandise value – €1.2 billion from Net-A-Porter and Mr Porter and €.9 from off-price Yoox and Outnet – to its current $1 billion (€914 million). The average order value (AOV) for Net-A-Porter is about $735, just shy of Mytheresa’s $775. Yoox and Outnet’s AOV is around $250.

Mytheresa will also gain 1.4 million Net-A-Porter and Mr Porter luxury customers, along with some 2.2 million Yoox and Outnet customers, described as “aspirational” luxury consumers. That will more than triple Mytheresa’s reach across demographics as it currently reports some 900,000 “ultra-high-net worth customers.”

In an investor research note, TD Cowen sees the companies’ customer files as complementary rather than overlapping which will give it access to an expanded market.

They’ll need it since Similarweb’s online tracking data finds direct-competitor Farfetch’s annual traffic is nearly double that of Mytheresa’s and Net-A-Porter’ combined as of June – 23.9 million compared with 6.9 million for Mytheresa and 6.4 million for Net-A-Porter.

The combined companies also complement each other in geographic reach. About 45% of YNAP revenue is generated in North America, while Mytheresa derives about 55% of revenues in Europe. The U.S. makes up 25% of Mytheresa sales.

We want to be the leading global player. And the market opportunity is extremely significant.

What Comes Next

In a conference call explaining how the integration of YNAP will unfold, Kliger stressed that each brand will have clearly defined and differentiated identities but will run on a shared technology stack for greater operational efficiencies and customer data analytics.

At the luxury end, Mytheresa, Net-A-Porter and Mr Porter will operate three distinct storefronts.

“This will allow us to cover the market with differentiated positioning, including differentiated brand portfolios, customer and geographic focus. This makes for a strong, valuable position towards luxury brands based on depth and breadth of customer reach,” Kliger shared.

Mytheresa already has strong, sustained relationships with some of the biggest names in luxury, numbering some 200 brands. And with the addition of Net-A-Porter’s brands and with Richemont’s backing, it should elevate its stature as a partner further. In the luxury market, status matters and Mytheresa just got a whole lot more.

Integrating the off-price side of the YNAP business will be more problematic. Yoox and Outnet have been particularly challenging for Richemont. Net-A-Porter has delivered low-single-digit adjusted EBITDA margin for Richemont, but the off-price business has been unprofitable.

Mytheresa intends to simplify and streamline the off-price operating model, but Cowen notes Mytheresa’s experience is in full-price luxury not off-price. “It may take time to ramp the outlet businesses,” it observed.

All Eyes On Growth

Bain and Company predicts that the digital personal luxury market will more than double in size from 2023 to 2030, growing from around $80 billion in 2023 to $200 billion in 2030. Mytheresa plans to make the most of that growth.

“We are still a very small player. We want to be the leading global player. And the market opportunity is extremely significant. We believe there is even more growth opportunity if we approach the market with different storefronts,” Kliger said.

As for Richemont, it is surely relieved to be unburdened from YNAP, which never fit well into its luxury business model.

“We are pleased to have found such a good home for YNAP. 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.” Johann Rupert, chairman of Richemont, said in a statement.

TD Cowen shares the positive view of the growth prospects for Mytheresa but is more restrained about how quickly Mytheresa can fully execute the integration. In particular, it is cautious about folding in the off-price side of the YNAP business.

“The success of the deal will largely depend on how quickly and seamlessly MYTE can integrate YNAP’s IT stack and nine distribution centers globally across the combined platform. Yoox had tried to create a proprietary IT platform, but its more complicated warehouse network combined with its much lower AOV business resulted in poor execution,” Cowen wrote.

But then, we all know strategy is the easy part. Execution is where Mytheresa will be tried and tested. One thing for sure: Richemont has confidence that Michael Kliger and his Mytheresa team have what it takes to turn YNAP around, if anyone can.

This article was originally published on Forbes – navigate to the original article here.