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By
Reuters API
Published
Aug 24, 2022
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Richemont to sell YNAP stake to Farfetch, takes 2.7 billion euro writedown

By
Reuters API
Published
Aug 24, 2022

Richemont said on Wednesday that Farfetch would acquire a 47.5% stake in the luxury goods group's loss-making online fashion retailer YOOX Net-A-Porter (YNAP) and said Alabbar would take 3.2%.


Reuters



The maker of Cartier jewellery and IWC watches also said it expected a 2.7 billion euro ($2.68 billion) writedown.

"The carrying value of this investment will be written down to the expected fair value less costs to sell, resulting in a non-cash charge to Richemont consolidated income statement estimated at 2.7 billion euros," it said.

The deal between Richemont, Farfetch and Symphony Global, an investment vehicle of Mohamed Alabbar, also laid the path, through a put and call option mechanism, towards Farfetch potentially acquiring the remaining shares in YNAP, it said.

The deal comes amid a flurry of industry-wide investments in digital services as luxury players shrug off past skepticism and embrace new channels to reach customers, spurred by a faster shift to online consumption during the pandemic. 

"Excellent news for Richemont, at last. The deal closes years of underperformance and heavy investment in YNAP," Vontobel analyst Jean-Philippe Bertschy wrote in a note, recommending the stock as a "buy".

Shares were indicated to open 1.4% higher based on pre-market indications.

Richemont had said in November it was in talks with Farfetch about selling a minority stake in YNAP and said it was trying to get other investors on board.

The agreement clears the way for Richemont brands and YNAP to switch to Farfetch technology and to boost the watch and jewellery offer on Farfetch's own retail site, with the addition of Richemont brands.

Richemont has invested heavily in YNAP over the years, but its online distributors, which also include watch marketplace Watchfinder, still had an operating loss of 210 million euros in the fiscal year to March.
 

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