Richemont Promotes e-Commerce Platform for Luxury Goods

“Luxury goods makers need more critical mass in e-commerce to survive." Johann Rupert, Chairman and main shareholder of the Swiss company Richemont is very clear about his view of the future.

Leeson. 11/06/2015
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Richemont is a multinational based in Geneva, Switzerland. It has four main business areas: jewelery, watches, writing products and clothing. It may not sound familiar under that name, but surely everybody can recognize many of the brands that it controls: Roger Dubuis, Vacheron Constantin, Montblanc, Chloe, Polo Ralph Lauren … but its flagship and most recognized brand is Cartier.

Its president and shareholder is the South African Johann Rupert, son of company´s founder, Anton Rupert, who started his empire in the tobacco market (he owned Rothmans until he sold it to British American Tobacco in 1999) and then diversify to the luxury industry.

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Rupert is convinced that luxury product companies have to increase their presence in the online market to survive, to fend off competition from giants like Amazon. Therefore, it has proposed LVMH to join to Yoox Net-a-Porter platform. Meanwhile, it has also proposed Kering to increase its presence in the platform, which is currently limited to a joint venture to sell online all its products except Gucci. Rupert proposes Kering and LVMH to sell their products through the neutral exchange platform and, in exchange, to become shareholders.

Richemont is the main shareholder of the platform, with a 50% stake, but its vote is limited to 25% to preserve its independence. Richemont was the owner of Net-a-Porter, the largest of the two companies (65% of the total revenues). Yoox and Net-a-Porter merged at the end of the first quarter and have annual sales of about €1.3 billion.

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When they merged in March, it said it was willing to increase capital to engage strategic partners. At that time, Richemont also advanced plans to create an exclusively focused platform on luxury products to enhance the online customer experience. For this goal, it needs to incorporate big names to attract customers and establish itself as the leading company in Internet.

Richmont is facing difficult times on the stock market. It losses 13% in twelve months and 12% so far this year, penalized by the decision of the Swiss Central Bank to allow appreciation of the Swiss franc. Although it has recovered some lost positions, currently it is trading at the lowest levels since the decision of the central bank in mid-January 2015.

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Disclosure: The author is not responsible for the views expressed in the article. The text was written freely expressing ideas, without receiving any compensation. The author has no business relationship with any of the companies whose shares are listed in this article.

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