LONDON — Shares in Compagnie Financière Richemont climbed 3.2 percent to 87.75 Swiss francs, or $91.59, at the close of trading on Friday following reports that it’s mulling an initial public offering for Net-a-Porter Group.
The news that Richemont could be talking to bankers about mounting an IPO next year comes just weeks after Gary Saage, Richemont’s chief financial officer, insisted that the company was holding onto all of its companies.
Asked during a conference call about continued market speculation that Net is for sale, he said: “We made very clear last May that it is not. We love all our 20 ‘children,’ and none of the companies is for sale.” Saage added that Net had only just tipped into profitability in the first half of the fiscal year.
Talk that all or part of Net-a-Porter was for sale — with suitors including Yoox Group in hot pursuit — first flared in the autumn of 2013, and since then the company has repeatedly denied that it is shopping Net.
However, industry observers say the time might be right to at least consider an IPO for the company, which remains a small but fast-growing part of the Richemont stable.
Luca Solca, a managing director at Exane BNP Paribas, told WWD that Net-a-Porter has a “first-mover advantage, but the luxury industry is waking up to the online opportunity and the space is bound to get crowded.”
He believes that in a world where all of the luxury brands and department store chains are now online, and all of the major online malls, such as Amazon and Alibaba, have a luxury section, Net’s first mover advantage will erode.
“It will be difficult to increase profit margin significantly, despite larger scale. Hence, unlocking the value of Nap in the short term — through an IPO or otherwise — may not be a bad idea at all,” he said.
Solca isn’t the only analyst eyeing Net’s stiffening competition in the online space. In a report published in late October, Thomas Chauvet at Citi took a more conservative view of Net, slashing his valuation of the company to 2 times the ratio of enterprise value to sales, from 3 times that ratio.
Chauvet argued that his revised figure reflected greater pressures to move merchandise, and competition from peers such as Asos.com and Yoox Group. He declined, however, to comment on Friday’s news, first reported by Bloomberg, that Richemont may be mulling an IPO.
Richemont does not disclose the balance sheets of its separate divisions. According to the latest figures on Companies House, the official register of British businesses, however, losses at Net narrowed to 12.9 million pounds, or $20.2 million, from 19.3 million pounds, or $30.5 million, in the 12 months to March 29.
However, operating profit as a percentage of sales rose to 4.2 percent from 3.7 percent in the previous year.
Sales advanced 22.6 percent to 532.6 million pounds, or $835.1 million, on the back of the new investments, and from growth across all markets, particularly the US, and the Asia-Pacific region.
A Richemont spokesman did not return calls seeking comment.