Richemont shares climb on deal to enhance its access to Chinese market
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DURBAN - RICHEMONT shares surged more than 11 percent on the JSE on Friday after the Swiss luxury goods company announced a global strategic $1.1 billion (R17.14bn) partnership with Alibaba and Farfetch to accelerate the digitisation of the luxury goods industry.
Richemont said the companies were joining forces to provide luxury brands with enhanced access to the Chinese market, as well as accelerate the digitisation of the global luxury goods industry.
Alibaba and Richemont would each invest $300 million in private convertible notes issued by Farfetch. That would be followed by another investment of $500m by both Alibaba and Richemont, $250m in Farfetch China by taking a combined 25 percent stake in a new joint venture (JV) that will include Farfetch’s marketplace operations in the China region.
Farfetch will launch luxury shopping channels on Alibaba’s platforms, Tmall Luxury Pavilion and Luxury Soho, and Farfetch will expand their reach to Alibaba’s 757 million consumers.
Richemont chairperson Johann Rupert said these developments represented a further meaningful acceleration of their journey towards luxury new retail by building on their successful JV with Alibaba.
“This initiative brings together a powerful combination of highly complementary strengths, notably with our Maisons’ luxury retail expertise and Yoox Net-A-Porter’s (YNAP’s) deep brand partnerships, expert curation and exceptional customer care, that will help us deliver a seamless omnichannel experience to our discerning clientele,” Rupert said.
Richemont, through its subsidiary, YNAP, entered into a JV partnership with Alibaba to launch two mobile apps for YNAP’s and Mr Porter multibrand, in-season online stores for consumers in China. Alibaba provided technology infrastructure, marketing, payments, logistics and other technology support to the JV.
The partnership came after Richemont acquired YNAP for € 2.7bn (about R50bn) in 2018.
Richemont said in addition to the new partnership, Alibaba and Richemont have an option to purchase a further combined 24 percent of Farfetch China after the third year of the venture.
“Alibaba and Richemont will also explore additional opportunities to work closely with Farfetch to provide services to luxury brands. The investments by Alibaba and Richemont in Farfetch China and the establishment of the JV are expected to be completed during the first half of 2021, subject to … conditions,” Richemont said.
Farfetch said separate from this partnership, the Paris-based Artemis group would invest $50m to increase its stake in Farfetch.
José Neves, Farfetch’s founder, chairperson and chief executive, said that the announcement was a major step in their mission to connect curators, creators and consumers of the industry. “The $1.15bn investment in Farfetch from Alibaba Group, Richemont and Artemis is a strong validation of our position.”
Richemont shares closed 10.95 percent higher at R121.22 on Friday.