The Swiss luxury goods group behind Cartier and Van Cleef & Arpels is in talks over a deal to cede majority control of its lossmaking Yoox Net-a-Porter ecommerce business.
Richemont said that it was in “advanced discussions” over the sale of a minority stake in the struggling clothing and accessories business to the online retailer Farfetch in a move designed to appease disgruntled shareholders.
The company, which also owns the Piaget brand, said that it would invite other companies to work alongside Farfetch in trying to turn Net-a-Porter into a neutral industry-wide retail platform with no ultimate controlling shareholder.
Shares in Richemont, which is controlled by the South African billionaire Johann Rupert, rose by SwFr12.95 to SwFr133.95 in morning trading, a rise of 10.7 per cent, on the news of the possible solution to Net-a-Porter’s woes as well as better-than-expected first-half results. “It’s an early Christmas present for Richemont shareholders,” Jon Cox, an analyst at Kepler Cheuvreux, said.
Richemont cautioned, however, that the price and terms of any transaction had yet to be resolved and it remains unclear whether its plans would involve spinning off Net-a-Porter into a separate company.
The Swiss luxury goods group has made significant investments in Net-a-Porter in an attempt to emulate Farfetch’s asset-light model but its persistent losses have prompted talk of a sale. It emerged this week that Third Point, an activist hedge fund, had built a stake in Richemont to put pressure on management.
Artisan Partners, an existing Richemont shareholder, backed Third Point’s contention that the company was undervalued, mainly as a result of Net-a-Porter’s poor performance.
Rupert, who holds a 9 per cent stake in Richemont but a majority of its voting rights, claimed that its actions were “not in response to activist pressure at all”. He also reiterated that it was not interested in a merger with the rival luxury goods group Kering and insisted that its rejection of a deal was “a binding statement” and added: “We believe in our own business.”
Net-a-Porter has failed to cash in on the surge in online shopping during the pandemic and revenues in the six months to the end of September fell by 15 per cent to €934 million. Losses were flat at €141 million.