PARIS (Reuters) – Richemont labels are moving ahead with the transfer of their online businesses to Farfetch technology, which they are satisfied with, executives at the Swiss-based group said Friday.
However, they declined to comment on the progress of a deal to transfer part of Richemont’s wholly online YNAP fashion and accessories business to the U.S.-listed company.
Richemont on Friday reported an additional 527 million euro write down on YNAP for the last six months, which it classifies as held for sale and said that YNAP sales were down 10% at constant rates over the period.
The adoption of Farfetch technology to run the online business of Richemont labels is part of a wider agreement for Richemont to sell a 47.5% stake in YNAP in exchange for more than 50 million Farfetch shares, announced in August 2022.
“Everything we expected in terms of technology from our Farfetch friends, they’ve delivered,” Richemont chairman Johann Rupert told analysts on an earnings call.
“We are satisfied, we believe that it’s going to enhance our business model,” he added, citing the need to bulk up knowledge of clients and data.
When asked if the company could recover business handled by Farfetch platforms if things were to go wrong, the executive said without elaborating that the group had safeguards in place.
Financial troubles at Farfetch have raised questions about the deal, which was recently cleared by European authorities, the last regulatory approval needed.
Farfetch, which helped convince many luxury brands to embrace online selling with an innovative business model, has struggled to reach break-even because of high technology and marketing costs, further complicated by a weakening outlook for fashion sales.
Farfetch shares have fallen by more than 60% in the past six months. Bernstein analysts say the company’s difficulties “could have ripple effects through an already suffering industry”, with more than 500 Italian boutiques depending on its platform.
(Reporting by Mimosa Spencer; Editing by Kirsten Donovan)
