Yoox Net-A-Porter Exiting China, Focusing on More Profitable Markets

Yoox Net-A-Porter (YNAP) is reportedly exiting China amid weak consumer spending in that country.

The Richemont-owned luxury eCommerce platform is moving to focus on its core and more profitable markets, Bloomberg reported Friday (June 14), citing an emailed statement from a Richemont spokesperson.

The Net-A-Porter platform was launched in China in 2013 but was unable to gain market share in the country’s competitive eCommerce market. Its sister platform, Outnet, left China in 2015.

This move comes at a time when luxury retailers are under pressure in China because of weak consumer spending and a shift from buying luxury goods to focusing on bargains, according to the report.

It also comes as Richemont is seeking to sell a majority stake in YNAP after an agreement with Farfetch fell through, the report said.

Richemont said in July that China’s role in luxury retail was diminishing.

While the luxury sector had expected to see a revival in China that would offset sluggishness in the United States, sales in the sector continued to weaken.

Richemont reported at that time that although it had witnessed an increase in sales from Asia, China’s slower-than-anticipated economic growth raised concerns about a potential reduction in consumer spending.

In January, Richemont reported an 8% year-on-year increase in sales of its luxury goods for the quarter ended Dec. 31, exceeding analyst expectations, and reported that the growth was driven in part by strong demand in China, Hong Kong and Macau.

Richemont’s greater exposure to the higher-priced hard luxury sector protected it from a significant downturn in aspirational and middle-class spending that hurt luxury sales at other companies.

However, it was reported Friday that luxury brands in China are resorting to “unprecedented” discounts to sell unsold inventory and entice cautious Chinese consumers amid growing concerns about a slowdown in spending.

The weakening demand from Chinese consumers has already impacted luxury earnings. Kering, the parent company of Gucci, warned of a potential profit drop of up to 45% in the first half of 2024 due to weak sales in China. Burberry’s stock has plummeted in the past year due to weak demand in China and the United States.