Yoox Net-a-Porter Group Sees Strong Growth In Q1

MILAN—A strong in-season performance and growth across all markets boosted the Yoox Net-a-Porter Group’s first quarter revenues.

In the three months ended March 31, sales rose 15.4 percent to 514.8 million euros, or $545.6 million, compared with 446.2 million euros, or $490.8 million in the same period last year. On an organic basis, revenues were up 19.1 percent.

“The first quarter saw strong revenue growth combined with a number of strategic initiatives which put us on track for our ambitious short and medium-term targets,” said Federico Marchetti, chief executive officer of the group. Marchetti highlighted the launch of the “Next Era” new omnichannel business model, launching with Valentino in early 2018, as reported.

“With numerous exclusive launches, capsule collections and innovative campaigns, including Alaïa, Cartier, Gucci, and Tiffany among others, YNAP is proud to reinforce its position as the leading online retail partner for the most prestigious brands in luxury fashion and jewelry and watches.”

In the period, sales at the multibrand in-season channel, which includes Net-a-Porter and Mr Porter, climbed 12.2 percent to 266.7 million euros, or $282.7 million, representing 51.8 percent of total. On an organic basis, sales were up 20 percent, which is an acceleration over the last quarter of 2016.

The multibrand off-season channel, which includes Yoox and The Outnet, grew 18.5 percent to 192.1 million euros, or $203.6 million, accounting for 37.3 percent of total. The latter introduced the Altuzarra and Tabitha Simmons brands, as well as a boutique dedicated to active wear.

The group manages online flagship stores for brands ranging from Giorgio Armani to Valentino and this channel was up 20.6 percent to 56 million euros, or $59.3 million, accounting for 10.9 percent of total sales.

Gross merchandise value advanced by 28 percent on an organic basis.

Over the quarter, the existing partnership between Armani and the group for the A|X Armani Exchange brand, previously active only in North America, was extended to the U.K. and will launch in other key European countries by the end of the year.

After the release of the results at end of trading in Milan, where the group is publicly listed, during a conference call with analysts Enrico Cavatorta, chief financial and corporate officer, defined this as a “solid and satisfactory quarter, with strong organic growth across all business lines.” In particular, he pointed to an acceleration in the in-season division.

Mr Porter this month is launching a new exclusive capsule collection designed by Gucci’s creative director Alessandro Michele. “This follows a previous very successful capsule collection exclusively designed by Michele for Net-a-Porter [in 2016],” said Silvia Scagnelli, corporate development and investor relations director. “Gucci has performed extremely well across all platforms.”

Net-a-Porter extended the partnership with Tiffany & Co. from jewelry to fine watches in January and it also became the first global online retail partner for Buccellati and Piaget, as well as Cartier and Montblanc, also on Mr Porter. In particular, Montblanc’s first smartwatch is being unveiled this month on Mr Porter.

YNAP expects to expand its brand portfolio as part of its multibrand in-season business line and will launch a Mr Porter private label.

Also, the multibrand off-season business line is expected to mainly benefit from the start of The Outnet’s international expansion, including the debut of the Yoox private label business.

Scagnelli emphasized the need to strengthen the group’s personal service offer, as YNAP introduced a new Personal Shopping team in Los Angeles. “California is a relevant state for us, it contributes to a large part of our U.S. business,” noted Scagnelli.

Net-a-Porter and Mr Porter will launch innovative personal shopping services dedicated to their higher-value customer base in select cities, beginning September 2017. Specifically, a new “You try, we wait” service will be available through personal shoppers, allowing customers to receive and try their order at home, and hand anything they wish to return directly to the group’s dedicated same-day delivery fleet. One-on-one at- home shopping consultations, “Net-a-Porter at home” and “Mr Porter at home,” will also be available upon request.

The group grew across all its key markets in the first quarter. Sales in Italy rose 10.9 percent to 31.3 million euros, or $33.1 million, with a significantly improved performance compared with the last quarter of 2016, driven by an acceleration in the growth of Yoox. “Italy is back to a double-digit growth after a soft end of the year,” said Cavatorta.

The U.K. was up 2.5 percent to 66.7 million euros, or $70.7 million, dented by the depreciation of the euro compared with the British pound. At constant exchange rates, the region gained 14.3 percent. “The U.K. is still one of the best European markets despite the Brexit, and the devaluation of the pound has made it more appealing,” said Cavatorta.

North America, the group’s main market grew 21.2 percent to 161.3 million euros, or $171 million. “We’ve seen a constant acceleration, this is a very solid market,” observed Cavatorta. In response to an analyst asking about the success of the region, Scagnelli observed that the group is “strict on following its commercial calendar and is not distracted by promotional reductions of department stores.”

First-quarter revenues in Europe, excluding Italy and the UK, increased 11.2 percent to 134.5 million euros, or $142.5 million, reflecting continued softer performance in Germany and France, which was also affected by the political uncertainty around the French elections. “France and Germany are still seeing a single-digit growth,” noted Cavatorta.

The Asia Pacific confirmed its strong momentum, showing “no deceleration,” said Cavatorta, with sales growing 31.5 percent to 91.1 million euros, or $96.5 million, mainly driven by Hong Kong and China.

The Rest of the World region was up 0.7 percent to 29.9 million euros, or $31.7 million, reflecting strong growth in the Middle East.

Cavatorta projected a neutral foreign exchange effect, as the weak British pound was balanced by a positive US dollar and the Russian ruble.

Despite an “overall soft market,” Cavatorta confirmed its EBITDA guidance, noting that the “would expect the improvement at constant forex to last for the remaining nine months.” He also expects the off-season channel to “catch up.”

In the first quarter of 2017, the group opened new photo studios at the Interporto logistics pole in Bologna, while continuing to expand logistics capacity at Interporto in anticipation of the migration of The Outnet.

YNAP plans to invest between 160 million and 170 million euros, or $170 million and $180 million, in 2017, primarily in technology. It is also planning the opening of a new office and distribution center in Dubai, new logistics spaces at the Interporto logistics pole in Bologna, as well as the set- up of the in-season logistics hub in Milan.

The group appointed Alessandra Rossi as president of the off-season division, effective April, reporting to Marchetti.

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