MILAN — Yoox on Wednesday reported a 22 percent increase in second-quarter net profits following strong sales growth in all its business lines and geographic markets and a double-digit increase in average order value.
In the three months to the end of June, consolidated net income reached 1.1 million euros, or $1.43 million, compared with 900,000 euros, or $1.15 million, in the year-earlier period.
Consolidated net revenues — excluding returns — jumped 18.4 percent to 97 million euros, or $126.1 million.
Dollar amounts have been converted at average exchange for the periods to which they refer.
In an interview, Yoox Group founder and chief executive officer Federico Marchetti explained that about a quarter of gross sales (total customer orders) are returned. However, he pointed out that there are “huge differences in the returns rate, depending on geographic markets and product category.” For example, Marchetti said that in Germany, where there is a long-established culture of catalogue shopping, the return rate is very high. In terms of categories, some — like shoes — have very low return rates.
It also varies depending on which type of online store — multibrand or monobrand — the customer is shopping, Marchetti said, citing by way of example the armani.com online shop. “Someone who shops on armani.com probably knows Armani sizes well because he is a fan of the maison, so monobrands generally have a lower returns rate than multibrands.”
In terms of geographic markets, Marchetti said that in the second quarter, the U.S. and Italy, respectively the retailer’s first and second markets in terms of sales, were particularly strong and accelerated at a faster rate than in the first three months of the year.
In the U.S., which represents 22.2 percent of total group turnover, revenues through the end of June reached 46.1 million euros, or $60.39 million, up 23.3 percent from the year-earlier period. In Italy, which represents 15.2 percent of group sales, turnover increased 14.6 percent, to 31.5 million euros, or $41.27 million. Helping drive sales in the firm’s home country was consumers’ increasing confidence with smartphone and tablet shopping, Yoox said.
Yoox’s second quarter was “exceptional in terms of marginality,” with the company recording its highest gross margin on sales since its 2009 stock market listing, Marchetti said. Increasing average order value helped boost the firm’s profitability, Marchetti said.
In the first half of the year, net profit increased by 1.7 percent on the year-earlier period to 2.2 million euros, or $2.88 million.
Excluding incentive plan costs, the net result would have increased by 23.4 percent to 4.4 million euros, or $5.76 million, the retailer said.
Consolidated net revenues in the period increased 20 percent to 207.4 million euros, or $271.7 million, again following strong growth in all the firm’s business units and geographic markets.
The multibrand platforms Yoox.com, Thecorner.com and Shoescribe.com — which represent 71.7 percent of group sales — recorded consolidated net revenues (again net of returns) of 148.8 million euros, or $194.9 million, in the period, a 23.4 percent increase on the year-earlier period, boosted by a new release of the Yoox.com platform and the addition of brands with increasingly higher positioning on Thecorner.com, the company said.
The monobrand business, which sets up and manages online stores for leading global fashion and luxury goods brands including Armani, Roberto Cavalli and Diesel, saw revenues climb by 12.1 percent to 52.3 million euros, or $68.5 million.
Asked whether he felt there was a possible limit to the growth prospects of the monobrand business as the firm’s client roster keeps growing and the biggest brands sign up, Marchetti told WWD, “No, the road is still very long, for a series of reasons. All of the relevant brand partners who we’ve been working with since 2006 and had signed five-year contracts have renewed, so we feel we’re still at the beginning of a long story.”
Marchetti also pointed out that sales from the monobrand business have several drivers, including maintenance of the sites and design. Yoox, he said, has a new internal creative agency unit that works with brands to help optimize their sites.
Separately on Wednesday, Marchetti took issue with media reports last month that ranked him second on a list of Italy’s highest paid business figures at publicly traded firms. An article published July 22 in financial daily Il Sole 24 Ore estimated Marchetti’s worth at 22 million euros, or about $29.7 million, in 2012, surpassed only by Fiat ceo Sergio Marchionne.
While the report took into consideration salaries, bonuses, severance packages and capital gains, it was misleading, Marchetti said, because it lumped income and assets together in the final ranking. His actual earnings last year totaled 1.2 million euros gross, or about $1.6 million, including a bonus, 10 percent of which he donated to Yoox employees. He also chose to exercise stock options he received years ago to raise his stake in Yoox from 4.5 percent to 7 percent, taking out a bank loan in the process to cover the 9 million euro advance required for Italian taxes.
“In Italy, if you convert stock options you have to pay taxes immediately, even if you don’t sell your shares,” he said. “I wanted to increase my shares in my company, as an entrepreneur.”
He added the report would have been clearer had it not mixed entrepreneurs with company managers.