Is Richemont Ready to Reveal Net-a-Porter’s Future?
The Swiss luxury conglomerate reports quarterly results this week, as the failed deal to offload its struggling e-commerce unit to Farfetch looms large. That, plus what else to watch for in the coming days.
With Farfetch rescued by Coupang and Matches by Frasers Group, the final loose thread from December’s luxury e-commerce drama is the fate of Yoox Net-a-Porter. Parent company Richemont has said very little about what it will do with its loss-making unit. Speculation ranges from a sale to a spinoff to shutting the whole thing down; perhaps Richemont will surprise us all and decide to keep the thing. That’s unlikely, but so was Farfetch getting saved from bankruptcy at the last minute by a Korean e-commerce giant that’s currently touting a sale on sweet potatoes on its homepage.
Richemont reports quarterly results on Thursday, and will have to give some sort of update. While it’s possible that message will be “stay tuned,” the company has made no secret of wanting YNAP off its books ASAP.
All that aside, the results themselves are likely to make some waves. Richemont will be the third major luxury company to report this year, and by far the biggest. What it says will help clear up some confusing signals: last week, Brunello Cucinelli demonstrated that the (quiet) luxury boom was still going strong with fourth-quarter revenue up a better-than-expected 24 percent last year. However, on Friday Burberry issued its second profit warning in three months, reflecting softening luxury demand.
Richemont is likely to fall somewhere in between. The group’s focus on high-end jewellery is, for now at least, making it more resilient than brands reliant on convincing aspirational consumers to buy entry level handbags. Last quarter, the company reported sales growth, though it noted customers were getting pickier about where they shopped. In other words, whether Richemont can continue to rise above the slowdown depends on the strength of its brands.