YNAP Sales Top $1 Billion

At least one company is proving to be Amazon-proof: Yoox Net-a-Porter Group.

The fashion e-tailer on Wednesday reported first-half results that fired on all cylinders and, for the first time ever, surpassed the billion euro mark ($1.19 billion) in revenues. All its divisions registered strong growth in every geographical market as the company continues to invest in new technologies and, even more importantly, attract more and more brands.

Lifted by growth in all its business divisions and geographic markets, driven in particular by North America and the Asia-Pacific region, adjusted net profit was up 2.7 percent to 38 million euros, compared with 37 million euros in the same period of the previous year. After amortization connected to the merger and non-cash costs related to incentive plans, net profit was up 9.3 percent to 20.6 million euros, compared with 18.8 million euros in the first half of 2016.

In the six months ending June 30, revenues grew 15.3 percent to 1.03 billion euros, compared with 897 million in the same period last year. On an organic basis, sales were up 19.5 percent. In the second quarter, sales gained 15.2 percent to 519.3 million euros, lifted by all three business lines. On an organic basis, sales grew 20.2 percent.

“I am very pleased with these achievements,” said CEO Federico Marchetti during a conference call with analysts. “We are advancing with our integration and all our teams have worked together as one,” he said, thanking the 4,315 “talents” part of the group.

Marchetti said he was also “very proud” of the newly inked agreement with Ferrari S.p.A. for the setup and management of the new Ferrari online flagship store, with the launch planned in the first quarter of 2018, describing it as “a powerful luxury brand.”

In the first half, the group’s online stores drew 394 million visits, compared with 343 million in the same period of 2016, which translated into 4.5 million orders. Active customers were 3 million compared with 2.6 million at the end of June last year.

The multibrand in-season business line, which includes Net-a-Porter and Mr Porter, was up 12.8 percent to 552.9 million euros. In the second quarter, Net-a-Porter launched a new exclusive capsule collection from Chloé while Mr Porter introduced the Mr Porter x Gucci collection and a men’s capsule collection designed by Tod’s, encompassing ready-to-wear, footwear and accessories.

Chloe, Net-a-Porter, sandals, shoes
Chloé x Net-a-Porter.
CREDIT: Courtesy of Net-a-Porter

The fine jewelry and watches category had a solid performance, driven by strong business in the U.S. Cartier unveiled its new Panthère de Cartier watch collection on Net-a-Porter. The site also introduced Piaget in the period. The jewelry and watch category has triggered “so much interest,” said Marchetti, driving other hard luxury brands to ask to join. “This is a key differentiator. It will be super successful in the Middle East.”

As of June 30, the multibrand in-season channel accounted for 53.5 percent of total sales.

The multibrand, off-season division, which includes Yoox and The Outnet, was up 19.9 percent to 381.7 million euros in the first half, representing 36.9 percent of the total. Yoox introduced exclusive collections by model Bianca Balti, Fausto Puglisi and Arthur Arbesser. The Outnet launched Philosophy di Lorenzo Serafini and strengthened its beachwear offer with the introduction of Stella McCartney, Roberto Cavalli, Just Cavalli, La Perla and Calvin Klein collections, as well as Iris & Ink’s first-ever beachwear capsule.

The online flagship store’s business line, which includes the design, setup and management of e-stores for brands ranging from Giorgio Armani to Valentino, was up 12.2 percent to 99.5 million euros in the first half, accounting for 9.6 percent of the total.

In June, the group launched the new Isabel Marant online store in Europe, the U.S. and in the Asia-Pacific region, including China. The See by Chloé line has also been added to chloe.com as an extension of the existing global partnership with Chloé.

All markets contributed to the group’s performance. Revenues in the U.K. were up 2.4 percent to 138.5 million euros, penalized by the depreciation of the euro/pound exchange rate. At constant exchange rates, sales were up 13 percent.

North America, the group’s main market, continued to grow, with sales increasing 20.3 percent to 322.5 million euros. At constant exchange rates, sales in the region were up 17.3 percent. Chief financial and corporate officer Enrico Cavatorta did not hide his surprise at the performance of this region and, in general, said there were “no black spots” in any of the group’s business areas.

Corporate development and investor relations director Silvia Scagnelli said the in-season channel in the U.S. was driving high value customers to the group, which was investing in exclusivity and services such as personal shoppers. “L.A. is an area that is really good for us, and California is a priority for us at the moment,” Scagnelli remarked.

Italy was up 12 percent to 64.4 million euros.

Mr Porter x Gucci
A visual from the Mr Porter x Gucci campaign.
CREDIT: Courtesy Photo

Europe — excluding Italy and the U.K. — was up 12 percent to 267 million euros.

The Asia-Pacific region delivered another strong quarter, mainly driven by Hong Kong and China, resulting in first-half revenues of 178.5 million euros, up 29.9 percent. Asked by one analyst about China, Marchetti said this was “one of the fastest-growing” regions led by “very strong teams,” and although the area is being run “independently,” he “keeps all options open.”

Another analyst asked Marchetti if he had seen any effect from the new LVMH Moët Hennessy Louis Vuitton online platform 24 Sèvres. He responded, “We have a very good relationship with luxury groups such as [Compagnie Financière] Richemont, Kering and LVMH.”

Speaking of brands under the latter umbrella, he said the group works “super well” with Fendi, cited the launch of Tag Heuer and the good performance of Zenith, Repossi and Loro Piana. “We feel they are our partners and will continue to grow.”

Finally, the Rest of the World reached sales of 63.3 million euros, up 4.9 percent.

In the first half of 2017, adjusted earnings before interest, taxes, depreciation and amortization totaled 98 million euros, up 28.1 percent compared with 76.5 million euros in the same period of the previous year.  After 6.6 million euros of non-cash costs relating to share-based incentive plans, EBITDA gained 7.9 percent to 91.4 million euros. Cavatorta said that “based on the expected headwinds in the second half, we assume that the total impact on EBITDA margin will be probably neutral.”

The group continued to invest in technology and operational capabilities and in the period capital expenditure amounted to 80.2 million euros, compared with 48.1 million euros in the same period of the previous year. Cavatorta said he expected capital expenditure to total between 160 and 170 million euros in 2017, “with lower cash absorption.”

Moncler was the first brand to migrate to the new “state-of-the-art platform,” noted Marchetti, “that allows to deliver far greater personalization through artificial intelligence and smart data.”

The group continued with the roll-out of existing omnichannel functionalities while further investing in mobile. Mobile sales exceeded desktop revenues, accounting for more than 50 percent of year-to-date sales. “There is no going back and will be even more from now on,” Marchetti said.

With the aim of accelerating innovation and delivering best-in-class technologies including artificial intelligence capabilities, the group opened a new Tech Hub in London in the period.

As of June 30, the group’s net financial position was positive at 84.7 million euros, compared with 104.7 million at the end of December.

By the end of the year, the group will also open a new office and distribution center in Dubai, and complete the capacity expansion at the Interporto logistics pole in Bologna while continuing the setup of its in-season logistics hub in Milan.

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