Mytheresa CEO Michael Kliger has set out his ambition to create a €4 billion global luxury fashion force following the agreement to acquire the Yoox Net-A-Porter Group from Richemont.
The deal had been widely speculated and this morning it was confirmed that Mytheresa, one of the most robust performers in a challenging luxury market, had signed a deal to acquire its larger rival for €555 million. Richemont will also receive 33% of the fully diluted Mytheresa share capital upon completion of the deal and will provide a six-year €100 million revolving credit facility to provide working capital and funds to support the restructuring of the business.
In a call with media and investors, Kliger said that the current combined GMV (Gross Merchandise Value) of Mytheresa and YNAP was around €3 billion and by joining forces, the group could grow to €4 billion in GMV by FY29.
One of the keys to unlocking that growth, he said, was to decouple YNAP’s luxury businesses, which are profitable, from the off-price businesses, which are not. While specific profitability figures have not been released the combined GMV of women’s platform Net-A-Porter and men’s platform Mr Porter is around €1.2 billion (with low single digital EBITDA) while YOOX and The Outnet have a combined GMV of €900 million and are loss making. Mytheresa also has a GMV of just over €900 million.
Michael Kliger, CEO, Mytheresa
Kliger said that the luxury businesses would retain three very distinct store fronts but would all be transitioned to the Mytheresa technology and infrastructure platform. Last year it opened a state of the art distribution facility at the Halle/Leipzig Airport in Germany to speed up global distribution and has developed its own technology platform, which Kliger said had “performed excellently” since its introduction. Kliger said Mytheresa’s platform made it one of the few credible businesses to be able to take on YNAP and grow it, after a deal to sell YNAP to Farfetch collapsed last year as Farfetch itself fell into financial distress and needed to be rescued by South Korea’s Coupang.
The separation of the off-price businesses would enable them to be run entirely separately from the luxury arm and via a leaner business model, he said. Kliger batted away rumours that the separation was a signal that those businesses would be sold off, but he did confirm that YNAP’s white label business, which powers the e-commerce businesses of other third-party brands would be closed. That, however, had never been part of the Mytheresa deal and Richemont and YNAP themselves had decided to retire the division following the collapse of the Farfetch deal.
Mytheresa
While Net-A-Porter and Mytheresa have long since been rivals, Kliger highlighted several key differences in the businesses that he said made them complementary under the same group. “Mytheresa has around 250 brands and is highly focused on the ultra-luxury market – it is clearly positioned as ultra luxury in the industry. Whereas Net-A-Porter has always had a broader selection – I believe it is about 1,100 brands – including accessible luxury brands and it has more aspirational customers. If I can use a bricks and mortar comparison, Harrods and Selfridges are both in luxury but they are very different businesses,” he explained.
Net-A-Porter, Mr Porter and Mytheresa will retain their distinct identities, distinct brand selections and distinct marketing messaging after the deal completes. In the meantime they will continue to be run “as competitors” and as completely separate from Mytheresa with their own teams. “We have been very impressed by the teams at Net-A-Porter, Mr Porter and YOOX. We have very high respect for the teams that have delivered in tough times – as we have – an excellent performance. In the meantime, we will run entirely separately as competitors until regulatory approval,” Kliger said. As to who will run the business overall post deal, Kliger said it was too early to comment.
YOOX and Net-A-Porter (Alamy)
Richmont’s relationship with the group moving forward will be “entirely financial”, Kliger explained. Richemont will have one seat on the Mytheresa board but will not be involved in the operational running of the business, nor has the supply of any of its brands been promised as part of the deal. Richemont owns a number of big name fashion houses including Chloé, Alaïa, Dunhill, Gianvito Rossi and Cartier. “The deal with Richemont is a financial deal. Which brands we will sell and will not sell is independent of this deal. Conversations with Richemont maisons will be made independently; no part of the deal will involve access to the brands,” Kliger said.
Richemont chairman Johann Rupert said of the deal: “We are pleased to have found such a good home for YNAP. As a trusted partner to many of the world’s leading global luxury brands, YNAP is renowned for its pioneering high-end customer services complemented by its distinctive and inspirational editorial voice. Mytheresa is ideally placed to build on YNAP’s assets to further delight customers and brand partners alike across the world by harnessing both companies’ respective strengths.”
The multi-brand luxury market (indeed the luxury market in general) has been in tumult of late, leading to the sale of a distressed Farfetch to Coupang and the sale of Matches to Frasers Group, which closed it just weeks later. (Frasers, which owns the chain of UK super-boutiques Flannels, was said to have also been circling YNAP.) But Kliger said the market dynamics were not a concern as growth was still expected in the coming years and the enlarged group would be uniquely placed to take advantage of it. “We believe that this transaction will create significant value for our shareholders, brand partners and most importantly for our high-end customers,” he said.
