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Richemont Invites LVMH to Join Site to Compete With Amazon

Richemont chairman Johann Rupert invited LVMH and Kering to join in an attempt to build a luxury retail website that can compete with the likes of Amazon.
Amazon (L) and Net-a-Porter (R) | Source: Reuters, Flickr/ Maria Morri
By
  • Bloomberg

PARIS, France — Richemont chairman Johann Rupert invited LVMH and Kering to join in an attempt to build a luxury retail website that can compete with the world's largest online vendors.

The South African billionaire, who controls the Swiss company and its 20 brands, said he'd spoken to LVMH chairman Bernard Arnault and Kering about them joining the Yoox Net-a-Porter platform. Luxury-goods makers need more critical mass in e-commerce to survive against the competition, he said.

“We’re not big enough,” Rupert said in a speech at the Financial Times Business of Luxury Summit in Monaco on Monday. “What I said to them was they can come in and get equity in the company” if they commit their brands to sell via the platform.

Yoox and Net-a-Porter, which announced plans to merge in March, had combined annual sales of about 1.3 billion euros ($1.5 billion) in 2014. Amazon.com Inc., which has departments devoted to luxury watches and jewelry, had $89 billion in revenue last year. Rupert said last month the level of Amazon’s capital expenditure is “staggering.”

The Geneva-based company, whose full name is Cie. Financiere Richemont SA, has said it aims to make Yoox Net-a-Porter the “dominant neutral platform for the luxury-goods industry.”

Kering already has a joint venture with Yoox to manage e-commerce for most of its fashion and leather goods brands, except Gucci.

By combining with other brands, Yoox Net-a-Porter could offer a higher-end shopping experience compared with the largest online retailers, Richemont said last month. The online platform has said it plans to sell as much as 200 million euros in stock to allow for the entry of new strategic investors after the merger is completed.

Internet retail is “really a big boys’ game,” Rupert said on the May 22 conference call. “It’s not for the faint of heart.”

By Andrew Roberts, with assistance from Corinne Gretler; editors: Matthew Boyle, Thomas Mulier, Paul Jarvis.

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