Geneva-based Richemont Group said Wednesday that Farfetch would acquire a 47.5 percent stake in the luxury group’s loss-making online fashion retailer YOOX Net-A-Porter, and said Alabbar would take a 3.2 percent stake.
The owner of Cartier jewelry and IWC watches also said a value adjustment of 2.7 billion euros ($2.68 billion) was expected given the currency’s depreciation.
“The carrying value of this investment will be written down to the expected fair value less costs to sell, resulting in a non-cash charge to Richemont consolidated income statement estimated at 2.7 billion euros,” it said.
The agreement between Richemont, Farfetch and Symphony Global, an investment vehicle of Mohamed Alabbar, also paved the way, through a put and call option mechanism, for Farfetch’s potential acquisition of the remaining YNAP shares.
The deal comes amid an industry-wide wave of e-commerce investments as luxury players shed the skepticism of the past and embrace new channels to reach customers, spurred by a faster shift to online consumption during the pandemic.
“Excellent news for Richemont, at last. The deal closes years of underperformance and heavy investment in YNAP,” Vontobel analyst Jean-Philippe Bertschy wrote in a note, recommending the stock as a “buy”
Shares are expected to open up 1.4% on pre-market indications.
Richemont said in November that it was in talks with Farfetch to sell a minority stake in YNAP and said it was trying to find other investors.
The deal allows Richemont brands and YNAP to move to Farfetch technology and strengthen the watch and jewelry offerings on Farfetch’s retail site, with the addition of Richemont brands.
Richemont has invested heavily in YNAP over the years, but its online retailers, which also include the Watchfinder watch marketplace, still reported an operating loss of €210 million in the fiscal year ended in March.
Read also > Richemont: Why a deal with Farfetch is not guaranteed?
Photo à la Une : © Richemont
