On Everything #79: Unwrapping the Richemont Gift of YNAP to MyTheresa

On Everything is a weekly newsletter from Eugene Rabkin, our founder and editor.

This morning (European time) MyTheresa, the Munich-based luxury e-tailer, and Richemont, the Swiss luxury group, announced a deal in which the latter will sell the YNAP group, which consists of Net-a-Porter, Mr. Porter, the Outnet, and YOOX, to the former. Although calling this deal a sale would be a stretch, as not only Richemont is not getting any cash, but only MyTheresa’s stock, but it also guarantees a 100 million euro credit facility to the newly formed company for six years, meaning MyTheresa can tap Richemont for a significant amount of cash any time it wants.

What’s more, Richemont is “selling” YNAP in suspiciously good shape, with 555 million euros of cash on its balance sheet and no debt. Considering the horrible news that has dodged YNAP’s performance in the past couple of years, such a clean balance sheet should be raising eyebrows. It would be unsurprising to learn that Richemont has pumped cash dowry into YNAP in order to make the bride more attractive. In return for this, Richemont will own a 33% stake in the newly formed company. Considering that MyTheresa’s stock is about 80% off of its all-time high, and its market valuation is a mere $360 million, way smaller than the cash balance of YNAP, that’s not much of a deal. Meanwhile, Richemont is taking a 1.3 billion euro loss on this transaction, on top of another 4 billion euros it’s already written off over the past five years.