MILAN — A strong performance in all channels and global markets helped the Yoox Net-a-porter Group close the first nine months of the year with sales of 1.33 billion million euros, or $1.47 billion, up 12.8 percent compared with pro-forma revenues of 1.18 billion euros, or $1.31 billion in the same period last year. Sales accelerated in the third quarter, growing 11.7 percent to 435.4 million euros, or $483.3 million.
“Demonstrating its continued strength, the Yoox Net-a-porter Group has once again delivered robust organic growth despite a challenging economic and political environment,” said chief executive officer Federico Marchetti. “Surging ahead, today we are advancing plans to grow our Hard Luxury offering, announcing a new commercial partnership with IWC Schaffhausen that will propel our Fine Watches and Jewelry category to the next level.”
During a conference call with analysts, chief financial and corporate officer Enrico Cavatorta highlighted how, as part of the agreement with IWC parent company Compagnie Financière Richemont, YNAP was the “first ever online retailer to carry these watches.” They will be available on Net-a-porter and Mr Porter starting in mid-November. Richemont owns 50 percent of YNAP.
In the nine months ended Sept. 30, the multi-brand in-season business line, which includes Net-a-porter and Mr Porter, posted 9.5 percent growth to 705.2 million euros, or $782.7 million, accounting for 52.9 percent of total sales. During the third quarter, the group included new brands such as Prada on Net-a-porter and Mr Porter; Moncler on Net-a-porter, and Giorgio Armani and Ermenegildo Zegna on Mr Porter.
In September, Mr Porter marked another first for luxury content and commerce by combining TV and e-commerce through its brand-new Apple TV app.
As of Sept. 30, the multibrand off-season business line, which includes Yoox and The Outnet, reported a gain of 18 percent to sales of 496.2 million euros, or $550.8 million, accounting for 37.2 percent of total sales.
On Sept. 16, Yoox launched a complete new look and native app, accompanied by a new multichannel campaign to enhance brand positioning and drive awareness across digital, print, TV and out-of-home advertising. The site was redesigned with a user-centric shopping experience and brand positioning in mind.
As part of its mobile-first strategy to further capitalize on the mobile opportunity, in October The Outnet unveiled a new graphic look and typeface, introduced its first Iris & Ink footwear collection complementing its ready-to-wear offering in September, and introduced Tom Ford in October.
The online flagship store’s business line, which designs and manages sites for brands ranging from Giorgio Armani to Ermenegildo Zegna, saw sales climb 12 percent to 131.1 million euros, or $145.5 million, in the first nine months, representing 9.9 percent of total group sales.
On Oct. 14, YNAP and Marni Group Srl renewed their global partnership for the management of the brand’s online flagship store for an additional five years until October 2021.
Contracts with Sergio Rossi, which expires in the first half of 2017 with Zeis Excelsa SpA for Dirk Bikkembergs and Dolce & Gabbana Srl, were not renewed. In 2015, these online flagship stores together accounted for 0.6 percent of the group’s pro-forma revenues. The group will continue to sell the labels on its multibrand stores. Asked by one analyst about the discontinuation of the Dolce & Gabbana contract and whether it was by mutual consent, Cavatorta said that it was, “to a certain extent. Dolce & Gabbana is going through a process of reorganization similar to that of Roberto Cavalli. To our knowledge, the monobrand store was not in their top priorities. The discontinuation is a byproduct of the reorganization and rethinking of strategic priorities. We will continue carrying the brand in-season and off-season with our multibrand stores, on Net-a-porter and Yoox, even if we no longer manage the brand’s store,” Cavatorta explained.
Sales in North America, the group’s main market, gained 13.9 percent to 401 million euros, or $445.1 million, accounting for 30.1 percent of the total. Cavatorta said he was “very satisfied” with this performance.
Revenues in Italy grew 16.3 percent to 87.4 million euros, or $97 million.
In the third quarter of 2016, the U.K. registered a slowdown in sales as a result of the Brexit vote, with sales down 5.4 percent to 56.5 million euros, or $62.7 million, penalized by the depreciation of the pound. At constant exchange rates, sales were up 13.5 percent. In the nine months, sales in the U.K. gained 4 percent to 191.7 million euros, or $212.8 million. At constant exchange, they were up 14.8 percent.
Revenues in Europe (excluding Italy and the U.K.) climbed 11.4 percent to 353.7 million euros, or $392.6 million, in the nine months with continued “excellent growth” in Russia, said Cavatorta, mainly driven by Yoox, which only partially offset the weaker performance attributable to the unseasonably warm weather in September and softer consumer sentiment in France and Germany. Silvia Scagnelli, corporate development and investor relations director, said prices have not been revised for the U.K.
Asia-Pacific saw sales grow 21.9 percent to 214.2 million euros, or $237.7 million, in the nine months, lifted by an acceleration in the third quarter showing strong momentum in China, Hong Kong and Japan across all the online stores. The Asia-Pacific region accounted for 16.1 percent of total sales. While not breaking down a figure for China, “an important market in the APAC region, relevant but not the number one,” Scagnelli commented on the attitude of Chinese consumers. “They are significantly younger than average and much more mobile, more demanding. It’s technically important to be precise in communication with them, we see an increased level of sophistication,” she said.
Scagnelli also emphasized marketing initiatives in Asia, an “organizational focus,” such as a “new app for The Outnet Android appealing to Asian customers, a new app for Yoox, specifically for the Asian market, which proved very successful,” underscoring the need to be “creative.” In general, she said, “with more online players investing on digital” the group has been investing in “more targeted, more surgical initiatives, focusing marketing efforts, exactly identifying and targeting the user.”
The Rest of the World area grew 9.8 percent to 84.5 million euros, or $93.8 million.
Cavatorta said he expected to achieve further revenue growth and a year-on-year improvement in the adjusted earnings before interest, taxes, depreciation and amortization margin in fiscal year 2016. September and October accelerated, he said. “If we maintain this in November and December, we will finish the year in line with our guidance, up in the high teens. The numbers are confirming and comforting us, at constant forex.” He said the negative effect was expected also in the fourth quarter, landing in the region of 4 percent for the year.
The company expects capital expenditures to total about 140 million euros, or $155.4 million, in the fiscal year.
Cavatorta emphasized the “very big important milestone, one of the most important,” referring to the group’s first key integration for the development of one shared global techno-logistics platform, with the transition of all the former Yoox Group multibrand and monobrand online stores to the new Order Management System in November.