How to Sell
Richemont Sells YNAP to Mytheresa: A Strategic Shift in Luxury E-Commerce
Richemont has finalized an agreement to sell its Yoox Net-A-Porter (YNAP) e-commerce business to Mytheresa, marking a significant shift in the luxury fashion market. This move underscores Richemont's strategy to concentrate on its core luxury goods operations while divesting non-core assets.
A Strategic Move in the E-commerce Sector
The acquisition of YNAP by Mytheresa is part of a strategic effort to expand its foothold within the online luxury fashion market. Mytheresa, a luxury e-commerce platform based in Germany, is already a formidable player in the sector. The acquisition is expected to significantly enhance Mytheresa’s market presence, allowing it to more than double in size by incorporating YNAP's substantial gross merchandise value, which stands at approximately $2.3 billion.
Mytheresa's CEO, Michael Kliger, has expressed enthusiasm for the acquisition, highlighting the potential for growth and increased market share. "With YNAP's integration, we anticipate a broader reach and increased capability to serve our luxury clientele," he stated.
Financial and Operational Implications
Richemont, which acquired YNAP in 2018 for $3.3 billion, has decided to divest after years of financial losses associated with the platform. The company expects to write off approximately $1.4 billion in YNAP net assets upon the deal's closure. The sale aligns with Richemont's ongoing focus on its core luxury goods segment, as articulated by Johann Rupert, Richemont's chairman.
Mytheresa will issue Richemont 33% of its fully diluted share capital as part of the agreement. This transactional structure not only facilitates the acquisition but also retains Richemont as a significant stakeholder in Mytheresa’s future endeavors. Additionally, Mytheresa will assume YNAP's $604 million in cash balances, with no accompanying financial debt, thus positioning itself favorably for future growth.
Market Dynamics and Growth Prospects
With the acquisition, Mytheresa will gain access to YNAP’s impressive customer base, which includes 1.4 million Net-A-Porter and Mr Porter luxury customers, alongside 2.2 million Yoox and Outnet customers, classified as 'aspirational' luxury consumers. This expanded customer base presents Mytheresa with new opportunities to enhance its market reach and customer engagement strategies.
The average order value (AOV) for Net-A-Porter aligns closely with Mytheresa's existing AOV, suggesting a seamless integration of customer purchasing behaviors. Notably, Mytheresa’s significant presence in Europe, accounting for 55% of its revenues, positions the company well to capitalize on the predicted growth of the digital personal luxury market, which Bain and Company anticipates will more than double by 2030.
Challenges and Future Outlook
Despite the optimism surrounding the acquisition, there are concerns regarding the integration of YNAP's IT infrastructure and distribution networks into Mytheresa’s operations. The successful execution of these integrations will be crucial for Mytheresa to fully leverage the potential of YNAP’s assets.
Industry analysts, including those from TD Cowen, have expressed a positive outlook on Mytheresa’s growth prospects, citing its strategic positioning and the robust leadership of Michael Kliger and his team. Richemont also trusts in Mytheresa's ability to rejuvenate YNAP, with Johann Rupert expressing confidence in Kliger’s leadership.
As Mytheresa moves forward with its ambitious plans to become a leading global player in the digital personal luxury market, the acquisition of YNAP represents a pivotal step in its growth trajectory. The successful integration of YNAP will be instrumental in realizing these ambitions, amidst a rapidly evolving e-commerce landscape.
With the sale expected to conclude in the near future, the luxury e-commerce sector is poised for a significant transformation, as Mytheresa and Richemont realign their strategic priorities to adapt to the changing market dynamics.