By
Bloomberg
Published
Jun 14, 2024
Richemont’s luxury e-commerce platform Yoox Net-A-Porter is pulling out of China, as weak consumer spending puts increasing strain on high-end brands’ operations in the world’s second-largest economy.
The digital retailer known as YNAP plans to focus investments and resources on its core and more profitable geographies, a Richemont spokesperson said in an emailed statement.
Net-A-Porter’s operator in China, a joint venture between YNAP and Alibaba Group Holding Ltd. called Feng Mao, is in liquidation, said people familiar with the matter, who asked not to be identified discussing internal decisions.
Alibaba didn’t immediately respond to a request for comment, while Richemont didn’t comment on the joint venture.
YNAP’s exit comes as China’s middle class, an important source of revenue for global luxury brands, turns more cautious on spending. A weaker outlook following the country’s economic downturn has dented household wealth and fueled youth unemployment. Some high-end labels have been hurt by soaring returns and cancellation rates on e-commerce platforms, while some are resorting to large discounts to boost sales.
Richemont, the Switzerland-based luxury group, is still seeking to sell a majority stake in YNAP after an earlier agreement with Farfetch Ltd. fell through, it said in a May earnings statement. Discussions are being held with potential buyers and the group expects to be able to disclose more before the end of the year, it said at the time.
Net-A-Porter entered China in 2013 but has since struggled to gain share in a highly competitive digital market. Its sister platform, Outnet, pulled out of China in 2015.
E-commerce vendors have been heavily hit by China’s post-Covid economic slowdown, as consumers shifted from splashing out on big-ticket items to seeking bargains. Spending during major holidays and shopping festivals this year has remained weak.
