Italy's Yoox meets forecasts with flat core profit, costs rise

Italian online fashion retailer Yoox reported flat first-quarter core profit on Monday as rising costs ahead of a planned merger with upmarket rival Net-a-Porter offset higher sales.

In March, Yoox unveiled an agreement with Richemont to buy Net-a-Porter in an all-share deal which will make the Swiss owner of Cartier the single largest shareholder in the new Yoox Net-a-Porter group.

Earnings before interest, tax, depreciation and amortisation (EBITDA) in the first three months of the year totalled 8.1 million euros ($9 million), matching analyst expectations and the previous year's figure.

Revenues rose 16.4 percent in the period to 147 million euros with U.S. sales boosted by a strong dollar. Revenues were up 13.6 percent at constant exchange rates.

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Yoox raised marketing investments strengthening its operations ahead of the merger which should close in September.

It also bore 1.6 million euros in extraordinary costs linked to the merger.

Merger-related one-off costs should be between 12 million and 15 million euros in 2015, newly appointed Chief Financial and Corporate Officer Enrico Cavatorta told analysts on a conference call.

Cavatorta also forecast a higher gross profit margin this year helped by positive currency effects.

Currencies played a significant role in the first quarter: U.S. sales soared 43 percent while the falling Russian rouble hit European sales. Yoox said it benefitted from a stronger Hong Kong dollar and Chinese yuan against the euro.

Yoox reaps more than two thirds of its revenues from its own three shopping websites, where sales rose 15.5 percent in the first quarter.

It also operates online stores for fashion brands such as Giorgio Armani and Dolce & Gabbana. Revenues from this line of business rose 18.6 percent in the period, it said.

€1 = $1.12/£0.72