Farfetch (NYSE:FTCH) just disclosed a major stake — 47.5%, to be exact — in luxury/fashion retailer Yoox Net-a-Porter, commonly known as YNAP. Moreover, YNAP’s parent company, Richemont Maisons, plans to adopt Farfetch’s e-commerce solutions in order to advance Richemont’s “omnichannel distribution capabilities.” Clearly, FTCH stock investors are excited about these developments as they’re pushing the share price higher today.
YNAP must be a high-conviction business, as Mohamed Alabbar’s Symphony Global took a 3.2% stake in YNAP. Much more newsworthy, though, is Farfetch’s stake, which represents nearly half of YNAP. Not only that, but the press release indicates “a path towards Farfetch potentially acquiring the remaining shares in YNAP.”
So, why would Farfetch be so interested in YNAP? Perhaps it’s because YNAP has an established global presence in luxury and fashion retail. Meanwhile, Farfetch’s e-commerce platform “is already connected with the inventory of many of YNAP’s luxury brand partners.”
Ultimately, it seems that YNAP wants to be an “asset-light” hybrid business, and it’s not far-fetched to think that Farfetch’s e-commerce technology can help YNAP achieve this transition.
What’s Happening with FTCH Stock?
FTCH stock shot right out of the gate today, gapping up 15% at the open and even surging 25% at time of writing. Soon, the buyers might break past the crucial $10 level and continuing pushing higher.
There’s also a major increase in volume, as 25 million Farfetch shares traded hands by noon, whereas the daily average is around 10 million. In other words, today’s investors are generally pleased with Farfetch’s arrangement with YNAP.
Let’s not get ahead of ourselves, though. Notably, Farfetch’s position in YNAP will be a non-controlling stake. Moreover, there’s currently no indication of a merger between the companies.
Still, this partnership could have a major impact on global luxury and fashion retail as we know it. YNAP’s and Richemont Maisons’ experience in luxury retail, along with Farfetch’s considerable technological capabilities, could produce a hybrid/omni-channel power player in 2022.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
