Swiss luxury group Richemont is in “advanced talks” to bring on Farfetch as a technology partner and minority investor in its loss-making Yoox Net-a-Porter unit, the company said in a statement Friday.

The deal being discussed could include spinning out e-tailer YNAP with investment from Farfetch alongside other parties, as well as YNAP using Farfetch’s technology systems to transition to a hybrid model that would blend traditional wholesale with a marketplace strategy.

Richemont said it was also discussing with Farfetch how to leverage the fashion-tech giant’s systems to accelerate progress on “new retail” at its brands, as well as the prospect of the group’s brands joining Farfetch’s marketplace. Farfetch confirmed the talks in a statement.

”Richemont is pleased to announce that further progress has been made towards creating a neutral, industry-wide platform, built on the latest omnichannel retail technologies, to support the digitisation of the luxury industry,” the company said.

Earlier Friday, Richemont reported six-month financial results that beat estimates, with sales rising 20 percent over 2019′s pre-pandemic levels to €8.9 billion ($10.2 billion). Operating profit quadrupled to €1.9 billion.

After Richemont purchased Net-a-Porter in 2010 for around $550 million, only to spin it out in a merger with Yoox and then buy back the combined company in 2018 for as much as $3.3 billion (then seen as a visionary move), YNAP has turned into a persistent headache for Richemont.

YNAP became loss-making again by 2019, and a botched technology upgrade failed to stop the departure of white-label clients like Kering and Moncler. Losses deepened to €420 million last year, and the unit is set to lose upwards of €300 million this year.

A merger with Farfetch could be the best way out, and Richemont has been courting the platform helmed by Portuguese fashion-tech pioneer Jose Neves, in part by sinking $550 million of investment into the YNAP rival last year.

If the deal goes through, migrating YNAP’s business to Farfetch’s systems could salvage the value of Net-a-Porter’s brand and client list while stemming losses.

The opportunity for Farfetch to power omnichannel services for Cartier — jewellery’s biggest brand and the number two player in watches — as well as selling the brand on its marketplace has been a key bargaining chip in the negotiations, Miss Tweed reported last month. Richemont’s comments that its brands could end up working with Farfetch as part of a deal appear to confirm that.

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