Yoox Net-A-Porter powers ahead despite slower Q3 growth

By

Sandra Halliday

Published
Nov 8, 2017

Yoox Net-A-Porter is going from strength to strength and despite a tiny slowdown in Q3 compared to the first half, is still powering ahead, it said late Wednesday.

The firm, which owns the Yoox, Net-A-Porter, Mr Porter and Outnet high-end websites, saw its turnover rising a healthy 17.7% currency-neutral, or 10.7% on a reported basis, in Q3. The period to the end of September saw sales really accelerating in Italy, the UK and the rest of mainland Europe.

It was further evidence of the recovery that has been seen in the luxury sector despite the wider fashion market in Europe and Britain proving to be challenging in recent months.

And it’s clear that the company is a global success story. Even the region with the lowest growth, North America, saw revenue up 10.3% currency-neutral and 4.3% on a reported basis.

The group’s turnover reached €481 million in the period with the company saying that multi-brand in-season sales (which account for 52% of the total) were up 16.8%. This part of the business is centred on Net-A-Porter and Mr Porter after The Corner and Shoescribe sites were axed in August last year.

Meanwhile the off-season multi-brand business (that is, Yoox itself and The Outnet) did even better with a 17.4% advance and the company is promoting Yoox heavily to push this number even higher.

But the best performance came from the e-commerce business YNAP manages for a raft of major designer names such as Armani, Valentino, Chloé and more. These third-party sites saw gross merchandise value up 24.8%.

It wasn’t all good news however. The group’s average order value (AOV) dipped to €330 from €331 a year ago in Q3, reflecting unfavourable exchange rate movements. And the Q3 performance was also a little slower than the first half when overall sales rose 19.5%.

With Q3 added in, that meant the first nine months saw an organic sales rise of 18.6% (13.8% reported) with the business generating €16.8 billion from 6.8 million orders. That was a strong advance compared to the 5.9 million orders it enjoyed a year earlier and underlined YNAP’s position as one of the biggest players in global luxury fashion e-tail. Site visits this year so far have hit 586.5 million, up from 510.1 million.

Profit figures for the nine months and Q3 aren’t through yet and there was no mention of margins so it’s unclear whether the numbers bode well for earnings in those periods. Last year the company made adjusted net profit of €69 million, up 16%.

FUTURE GROWTH

But YNAP clearly has plenty going on that should keep the profits coming in the years ahead. It has just begun a joint venture with Alabbar to boost its Middle East business. And this week it also unveiled its first private label collection for Mr Porter with the debut of Mr P. It expects this to boost "loyalty and shopping frequency and foster brand awareness among prospective customers,” as well add positively impacting margins.

As far as the Yoox site is concerned, last month it unveiled a new marketing campaign, featuring an omnichannel media mix including TV, cinema, out-of-home advertising and radio. The campaign, which initially launched in Italy, Hong Kong and Japan, has “already registered strong results in terms of engagement,” and will be extended to the US in November ahead of the Holiday season.

And while its monobrand third-party e-stores only account for a little under 10% of total turnover, they remain a key part of the business with the company is investing heavily in them for the future. Its Next Era technology and logistics project will allow the brands to offer enhanced delivery services and an “unprecedented online product assortment” for inventory located both in YNAP’s global logistics network, as well as in their own boutiques and logistics centres.