E-commerce: Richemont won't be caught YNAPing

Business

E-commerce: Richemont won't be caught YNAPing

Rupert-owned firm looks to boost digital capabilities with 'a major milestone in our transformation journey'

Marc Hasenfuss

A Swiss-based luxury brands conglomerate – which is controlled by the Rupert family – will see a surge in its e-commerce sales component following the takeover of online fashion retailer Yoox Net-a-Porter (YNAP).
At the weekend Richemont chief financial officer Burkhart Grund said Richemont – which owns best-selling luxury bands such as Cartier, Mont Blanc, Lancel, Van Cleef & Arpels, Baume & Mercier and Jaeger-LeCoultre – transacted about 1% of group sales in e-commerce.
“When combined with YNAP, we jump to 17%.”
Grund said the recent tender offer for YNAP (which has snagged Richemont a 95% stake in the company) was a major milestone in Richemont’s transformation journey.“YNAP operates in an attractive area of the market, where there are high barriers to entry. We believe there is a meaningful opportunity to help them grow the business over the long term and further strengthen their leading positioning in online luxury retailing with a long-term financial backing of Richemont.”
Richemont was a significant shareholder in YNAP after the merger of Net-a-Porter with Yoox two years ago. Earlier this year, Richemont tilted at a full takeover of YNAP to hone its focus on the digital sales channel.
Grund said the takeover of YNAP strengthened Richemont’s digital capabilities and accelerated its focus on omnichannel and digital marketing.
“These are key features of the transformation journey ... ”
Grund stressed Richemont’s strong balance sheet allowed the group to support and invest into its Maisons and seize long-term growth opportunities when they arose.
“Through our combination with YNAP, we believe that we are now strongly positioned to seize the opportunities offered in the digital field.”But Grund played down questions at the investor presentation on Friday around whether recent investments in travel retailer Dufry and YNAP would support the growth in “soft” luxury lines like leather goods.
He argued that Richemont’s exposure to the soft luxury sector was not necessarily the group’s first and foremost ambition. “We believe that both on the travel retail channel or on the full digital channel with YNAP is a meaningful opportunity for to leapfrog into a new age on the distribution side.”
Grund said Richemont had been asked whether it would look for an acquisition target in the leather goods sector. “Well, you know better than I that there are not many targets out there and, obviously, that is not our priority.”Francesca di Pasquantonio, an analyst at Deutsche Bank, pressed for more detail on Richemont’s plans and expectations around the integration of YNAP. “Just to have an idea on whether you are prepared to invest in the business to make YNAP catch up with peers, which are more advanced today.”
Grund reiterated that YNAP was a fantastic opportunity for Richemont. “We need to learn be quicker in learning about the customer and meet their expectations.”
He stressed that delivering on the omnichannel sales promise was critical. “We are strong in retail, and working to be stronger in wholesale ... with a strong asset in the digital field, we believe YNAP is a fantastic proposal that we can build over time.”
Grund believed YNAP had a very strong management team heading one of the best, if not the leading, asset in the digital arena. “And that’s why we decided to go a step further and try to control the entire company. Because we believe with a long-term view and with long-term capital deployment that YNAP is a very interesting proposal ... not only for us, but also for the market.”

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