LONDON — Mytheresa will acquire 100 percent of Yoox Net-a-porter group from Richemont with the ambition of creating a 4 billion euro online juggernaut in the luxury fashion space.
Richemont is selling YNAP to Mytheresa with a cash position of 555 million euros and no financial debt, in exchange for shares. Richemont will also make available a six-year revolving credit facility of 100 million euros to finance YNAP’s general corporate needs, including working capital.
Mytheresa will hand Richemont shares representing 33 percent of its fully diluted share capital. Richemont will also have the right to nominate a member and an observer to the Mytheresa board following the close of the deal, which is expected to take place in the first half of 2025.
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Mytheresa’s shares climbed almost 57 percent to close at $6.76 on the New York Stock Exchange on Monday.
“With this transaction, Mytheresa aims to create a pre-eminent, multibrand, digital luxury group worldwide,” said Michael Kliger, chief executive officer of Mytheresa, after the deal was revealed early Monday.
The acquisition, he added, will create significant value “for our shareholders, brand partners and most importantly for our high-end customers.” Industry sources said Mytheresa was able to secure the no-debt, long-term financing deal with Richemont after the final competitor, Permira, dropped out of the race.
Mytheresa, Net-a-porter and Mr Porter will remain separate businesses, offering those customers “differentiated but complementary” multibrand luxury edits based on curation, inspiration and quality customer service.
Kliger said that while all three brands played in the luxury space, there would be little overlap in terms of offer and that Net has a “broader” selection of merchandise and price points. Going forward, he said Net and Mytheresa will appeal to different parts of the luxury market, much like Harrods and Selfridges do.
In a call with journalists following the announcement, Kliger and Mytheresa’s chief financial officer Martin Beer said the aim is to leverage Mytheresa’s proprietary tech know-how and operational expertise to grow the Net-a-porter and Mr Porter businesses, which have been struggling amid a worldwide slowdown in luxury demand.
Kliger said he saw great opportunity for tech synergies across the Mytheresa, Net-a-porter and Mr Porter storefronts, which will lead to a business with 4 billion euros in gross merchandise value and a “high single-digit” adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) margin by fiscal 2029.
Currently, the Mytheresa and YNAP businesses have a combined gross merchandise value of 3 billion euros.
During the call, he touted Mytheresa’s strengths, and the opportunities that await in the online luxury space.
“We have unique strengths and operational expertise and we are the leading player in online luxury. We can bring a lot of resources and expertise to solve some of the complicated issues [at YNAP],” said Kliger.
He added that Mytheresa was purchasing YNAP from a position of strength.
As reported, in fiscal 2024, the Munich-based e-tailer posted adjusted net income of 7.7 million euros, compared with 18.4 million euros in fiscal 2023. Net sales increased 9.8 percent to 840.9 million euros from 766 million euros in fiscal 2023. Gross merchandise value grew 7.1 percent to 913.6 million euros.
Kliger said the company was projecting 7 to 13 percent net sales growth and 3 to 5 percent adjusted EBITDA margin for fiscal 2025. “We do see continued uncertainties and macro headwinds, but what we also see is that the U.S. is quite strong for us.”
Mytheresa’s momentum in the U.S. was another rationale for buying Net, which has a large distribution network in the region.
Kliger added that while times may be tough for digital luxury players right now, the opportunities remain, and Mytheresa is going to grab them.
He cited Bain’s and Altagamma’s projection that the total market for online luxury will double to around 170 billion euros by 2030. “It is a huge market opportunity to bring together the strongest brands in online digital luxury, and then inject our expertise, and know how, and apply our unique infrastructure,” he said.
There are no plans to collaborate with Richemont, even though it will become a significant minority shareholder in Mytheresa.
Kliger described the agreement with Richemont as a “pure financial deal,” and clarified that there would be “no operational relationship” between the two companies. He added that both YNAP and Mytheresa would continue to operate as competitors until the acquisition was finalized.
Kliger said that, going forward, profitability will come from full-price fashion sales and the “separation” of YNAP’s off-price division, comprising Yoox and The Outnet. The separation will allow for a “simpler and more efficient operating model driving higher growth and profitability” for the off-price businesses.
Beer said YNAP’s off-price division is loss-making, while the Net-a-porter and Mr Porter businesses are notching “low single-digit” profits.
As part of the deal with Richemont, YNAP’s white label division, once a powerful force in the industry, will be discontinued.
Johann Rupert, chairman of Richemont, said: “We are pleased to have found such a good home for YNAP. As a trusted partner to many of the world’s leading global luxury brands, YNAP is renowned for its pioneering high-end customer services complemented by its distinctive and inspirational editorial voice.”
Richemont said it expects the write-down of YNAP’s net assets to amount to about 1.3 billion euros, which also accounts for the cash to be left in YNAP upon completion of the deal.
Following the transaction’s close, Richemont will be subject to a one-year lock-up period, meaning it cannot sell its Mytheresa shares. There will also be a further, one-year period in which only limited sale transactions can take place.
Richemont’s shares closed up 2 percent at 133.5 Swiss francs on Monday, following the announcement.
The deal comes nearly 10 months after Richemont pulled the plug on an agreement to sell YNAP to Farfetch. Richemont took that deal off the table after the troubled Farfetch was purchased by Coupang.
That deal was a far more complex one, with Richemont planning to offload YNAP in stages to Farfetch and Alabbar, and to leverage Farfetch’s tech and marketing expertise for its wholly owned brands such as Cartier and Van Cleef & Arpels.
European analysts welcomed Monday’s announcement, which capped a year of turmoil for online luxury players, with Farfetch nearly collapsing before its rescue by Coupang, and Frasers Group placing Matches into administration shortly after selling it.
Both business failures rocked the market, and left brands, designers and investors spooked and, in some cases, out of pocket.
Citi’s Thomas Chauvet said the Mytheresa news should be taken “positively” despite Richemont’s write-down of 1.3 billion euros, including the 550 million euros in cash which is part of the YNAP package.
Chauvet wrote that he sees potential for the creation of a “leading and sustainably profitable” luxury, multibrand online platform.
Bernstein’s Luca Solca wrote that “a headache for shareholders has been resolved, and helpfully within the time frame Richemont had previously suggested to the market. Investors had expected a contribution to the acquirer or re-capitalization of the asset, and a further write-down. Both seem palatable in today’s announcement, and the 33 percent stake in Mytheresa provides a possible source of future upside” for Richemont.
RBC Capital Markets added that the disposal of YNAP should give Richemont the opportunity “to retain some exposure to online multibrand luxury retail” without operational control.
The bank estimated that Richemont’s disposal of YNAP has an enterprise value of negative 433 million euros, given its promise to sell the company with 555 million euros in cash, zero debt, and a revolving credit facility of 100 million euros for the six years following the deal’s close.
Industry figures expressed a mix of relief and enthusiasm about the deal.
Designer Jenny Packham said her company “has always enjoyed a strong and collaborative relationship with both organizations and we look forward to hearing about their, no doubt, innovative future plans.”
Norma Kamali said she and her company have a “wonderful” partnership with Mytheresa, a longstanding relationship with YNAP, and the deal is positive.
“We won’t know the impact and how they decide to go forward [immediately]. But change is inevitable in fashion, so we will work to make the best of it,” said Kamali.
Thibaut Perrin-Faivre, chief executive officer of Ulla Johnson, said, “We have strong relationships and business with both groups (MyTheresa and NAP). We feel they cater to a unique clientele, with strengths in different geographies, so we are glad to see the future of NAP secured and look forward to continuing to work with both teams.”
Kerry O’Brien, founder, designer and CEO of Commando, said the brand “has always valued our long-term partnership with Net-a-porter, a true leader in global luxury retail. Commando is excited to see this indispensable global partner emerge from this period of uncertainty stronger than ever, and we look forward to continued success together.”
Alex Bolen, CEO of Oscar de la Renta, said, “Our industry is oversupplied. There are too many stores both bricks-and-mortar and digital. Consolidation is necessary and healthy. It may — really, should — pressure OTBs [open-to-buys] in the medium term, but will ultimately lead to better and more consistent full-price sell throughs — the critical objective. We expect and favor more consolidation. The Mytheresa team are very strong operators. We think they have a great chance of making this work, and look forward to learning more details of their plans.”
Gary Wassner, CEO of Hilldun Corp. and chairman of Interluxe Holdings LLC, said the sale of YNAP to Mytheresa is “a tremendous relief. With all the turmoil at retail, the prospect of losing Net completely was not a pleasant one.
“Mytheresa has always had its own perspective and point of view. The direct-to-consumer retailers who now remain are all distinct from one another. From Ssense to LuisaViaRoma, and from Mytheresa to Saks.com there are clear differences in style and inventory,” Wassner added.
He’s also hoping that Mytheresa can organize the back office of Net-a-porter as well. He described working with Net as “very challenging. There’s no one, centralized payable department. The disorganization at the various divisions of Net-a-porter has created more and more work for small brands.”
He’s hoping for more nuanced, strategic buying from Mytheresa when it finally takes control of Net and Mr Porter. “We really don’t need another e-commerce retailer selling more of the same. Fashion needs change and newness. New brands. New designers. You can buy LVMH, Gucci, Dior anywhere,” said Wassner.
– with contributions from Lisa Lockwood and Rosemary Feitelberg.