Global luxury giant Richemont said on Thursday it was buying up a pioneering 10-year-old web-based women’s fashion retailer, Net-a-Porter, founded by a former editor and valued at 350 million pounds.
The Swiss group already owns one third of the business, which was created by former fashion journalist Natalie Massenet and employs 600 staff in London and New York.
The deal will turn the website into one of the luxury goods company’s hallmark “maisons,” alongside standalone brands such as Cartier, Dunhill, IWC, Piaget and Van Cleef & Arpels.
Massenet will remain as chief executive and will invest in a Richemont unit being created to own the online business, the Swiss group said in a statement.
“Richemont announces that it has made an offer … to acquire all of the shares in Net-a-Porter,” it said.
“The offer values the equity of Net-a-Porter at 350 million pounds (525 million dollars, 390 million euros).”
Richemont said that it had already received firm acceptances for its offer to buy the outstanding shares in Net-a-Porter from owners of stock representing more than 80 percent of the voting rights.
The total valuation given by Richemont amounts to about three times the website’s annual sales last year of about 120 million pounds.
Net-a-Porter has adopted the lively style of a chic fashion magazine to sell collections from more than 300 well-known designers, claiming customers in more than 170 countries.
It offers some 300 brands including Jimmy Choo, Stella McCartney and Givenchy, delivering clothes and accessories from an 18 euro (24 dollars) triple pack of socks up to a 16,600-euro handbag with a few clicks of a mouse.
It defied the recession in the 12 months to January 2009 after notching up a 234 percent rise in pre-tax profits to 10.1 million pounds.
Massenet used to work for fashion publications Tatler and Women’s Wear Daily. In November 2009, she was awarded an MBE honour by the Queen of England.
“Natalie has created a superb, customer-oriented business at Net-a-Porter in a relatively short period of time,” Richemont chief executive Johann Rupert said.
Massenet commented that her team was proud of what they had built up in the 10 years since the business was founded.
“Richemont has completely embraced our vision and strategy since they came on board as a shareholder and together we are going to continue to build the 21st century model for luxury fashion retailing,” she said.
Massenet reportedly has an 18 percent stake in the website and stands to make a substantial profit on her holding, estimated in some reports at 50 million pounds.
The luxury goods industry in general has traditionally been wary of online retailing but a Richemont executive pointed to recent web sales ventures by Cartier in Japan and the United States.
“The ‘maisons’ in the Richemont Group are not afraid of the net,” he said.
Alessandro Migliorini, an analyst at Helvea bank, described the acquisition as “a surprise,” pointing to limited synergies with the rest of the group.
“It is also true that Net-a-Porter brings with it a wealth of expertise in internet retailing, which is gradually gaining prominence in the relatively conservative luxury industry,” he added.
Richemont’s share price closed on Thursday with a gain of 1.9 percent.
The Net-a-Porter transaction will be booked for Richemont’s 2010-2011 financial year, which began on April 1.
Source: AFPrelaxnews, 2010