Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Luxury online retailer Mytheresa is among potential bidders to buy lossmaking ecommerce business Yoox Net-a-Porter from Swiss luxury group Richemont.
Private equity firms Bain Capital and Permira have also looked at Yoox Net-a-Porter, according to people with knowledge of the process.
However would-be bidders have expressed reservations about agreeing a deal because of ongoing losses at Yoox Net-a-Porter, which are expected to continue in the coming years and make the business difficult to value, according to people with knowledge of the sales process which is being run by Goldman Sachs.
Permira is looking at a potential transaction through its portfolio company BestSecret, a retail club based in Germany, according to people familiar with the matter.
Parent company Richemont, which also owns jeweller Cartier and fashion house Chloé, has been looking for a new buyer for Yoox Net-a-Porter ever since a deal to sell a 47.5 per cent stake to rival ecommerce retailer Farfetch fell apart at the end of last year because of Farfetch’s own financial problems.
Yoox Net-a-Porter has been a problem for Richemont for years with pressure from investors in the Swiss group to offload it. Richemont has so far booked €1.8bn in non-cash writedowns on Yoox Net-a-Porter and the division made a loss of €128mn in the first half of Richemont’s current financial year.
“We are willing to look but it’s uncertain whether this makes sense [to buy],” said one of the potential suitors.
“It’s very much a turnaround type case,” said another.
Richemont, Permira, Bain and Goldman declined to comment.
Mytheresa, a Germany-based luxury online retailer listed in New York, declined to comment on whether it was looking at Yoox Net-a-Porter but added: “Mytheresa is constantly evaluating opportunities to grow our business, which may include M&A activities from time to time.”
Richemont’s search for a new owner of Yoox Net-a-Porter comes amid a reckoning over the viability of luxury ecommerce sites following an implosion of several rivals.
In December Farfetch was bought by South Korean ecommerce group Coupang as it rushed to avoid insolvency while Matchesfashion was put into administration in March, only three months after being bought by Mike Ashley’s Frasers Group for £52mn. Its previous owners, Apax Partners, had acquired it in 2017 at a $1bn valuation
Richemont bought Net-a-Porter in 2010 before merging it with Yoox five years later in a fraught deal that led to the departure of Net-a-Porter founder Natalie Massenet. A troubled technology and logistics overhaul then dragged on for years, costing hundreds of millions of euros.
Luxury ecommerce retailers flourished during the easy money era as they benefited from luxury brands being slow to embrace selling online.
However while pandemic-era savings helped create a boom in online luxury sales, pressures were beginning to build: the cost of running the sites soared just as the brands, who resented the discounting offered by ecommerce retailers, began cutting back on wholesale and taking back control of their online sales. Meanwhile slow progress towards profitability for most of these businesses dimmed investor enthusiasm.
Read the full article here