Richemont sells stake in online retailer YNAP to Farfetch and Alabbar's Symphony

The agreement makes Yoox Net-a-Porter a neutral platform with no controlling shareholder

Richemont says it expects a $2.68 billion writedown related to the agreement. Reuters

Online fashion retailer Farfetch and Symphony Global, the investment vehicle of UAE businessman Mohamed Alabbar, will acquire a 47.5 per cent and 3.2 per cent stake in Yoox Net-a-Porter (YNAP) from global watch and jewellery major Richemont.

The agreement makes online luxury and fashion retailer YNAP a neutral platform with no controlling shareholder, the companies said on Wednesday.

It also allows Farfetch to potentially acquire the remaining Ynap shares, subject to certain conditions.

Under the agreement, Richemont’s brands will adopt Farfetch’s technology to power their digital activities, while YNAP will adopt Farfetch solutions for its shift towards a hybrid retail-marketplace model.

The move will build an “independent, neutral online platform for the luxury industry” that would be “attractive to both luxury brands and their discerning clientele”, said Johann Rupert, chairman of Richemont.

Mohamed Alabbar, founder and owner of Symphony Global, says this is an opportunity to build further on his long-standing relationship with Richemont and YNAP. Leslie Pableo / The National

“Farfetch's sophisticated technology will enable Richemont Maisons to benefit from the best route to market and realise their luxury new retail vision, while implementing a hybrid model at YNAP will greatly enhance its prospects,” Mr Rupert said.

YNAP, which has a base of more than four million customers globally, operates four multi-brand online stores across 180 countries.

“I am delighted at the opportunity to build further on my long-standing relationship with Richemont and YNAP, and participate, this time, in the realisation of their luxury new retail vision,” Mr Alabbar said.

“I am also confident that our deep understanding of the Middle Eastern luxury market, with its tech-savvy and influential customers, will be of great value to YNAP going forward."

Richemont said it expected a €2.7 billion ($2.68bn) write-down related to the agreement. But the amount could vary depending on the listed price of Farfetch shares and exchange rates.

“This amount depends on several variables, mainly the listed share price of Farfetch … and the US dollar-euro foreign exchange rate at the reporting date, and is therefore subject to change before the publication of the group’s full-year 2023 interim and annual consolidated financial statements,” the company said.

Farfetch shares, which have dropped more than 70 per cent since the start of the year, were trading at $9.50 on Wednesday.

It also missed its first-quarter sales expectations due to business disruptions from Covid-induced lockdowns in China and loss of sales in Russia.

The launch of Richemont Maison’s e-concessions on the Farfetch marketplace will boost the platform’s offering, especially watches and jewellery, the company said.

The decision is a “step change in our strategy for hard luxury, which represents more than 20 per cent of the luxury industry globally, but just 3 per cent of Farfetch sales, and is an area where we see much stronger customer demand relative to the supply we have had to date”, said Jose Neves, founder, chairman and chief executive of Farfetch.

“This significant partnership unequivocally establishes Farfetch as a pre-eminent global platform for luxury."