Yoox Group Shares Jump on Massenet’s Resignation at Net-a-Porter
By Nina Jones and Luisa Zargani
September 2, 2015
LONDON — It was only a matter of time. That was the reaction of observers to news that Natalie Massenet was resigning as executive chairman of Net-a-porter Group.
They said the move was destined almost from the moment in March that Net’s parent Compagnie Financière Richemont revealed the merger between the online retailer she founded in 2000 and Yoox Group. Massenet was to be executive chairman of the new company with defined responsibilities, but she now has severed all ties with the company and won’t be a member of the board of directors of the new group.
Her resignation immediately set off speculation as to where Massenet might end up next. For now, she has a 12-month non-compete agreement with Richemont that eliminates the chance that she might pop up at another online retailer, sources said. Others said Massenet, who is American, could perhaps move back to the U.S. from London. They also wondered how much longer she might serve as chairwoman of the British Fashion Council, a role that Massenet used to raise the standards of London Fashion Week — and also boost both her profile and that of Net. There have even been rumors over the last few years that she could wind up on Condé Nast’s short list of candidates to one day succeed Anna Wintour as editor in chief of American Vogue.
Massenet only hinted at her future plans in a statement issued Thursday morning via Net-a-porter. “My entrepreneurial drive is as strong today as it always has been, and my passion for innovation will continue to be my greatest guide in business,” she said. “The incredible experiences and memories of the past decade and a half…will always be an inspiration to me.”
She characterized the merger with Yoox as “the right time for me to move on to explore new ideas and opportunities.”
“The business I started in 2000 could not be in better shape today,” her statement read. She also pledged support for the merged Net-a-Porter and Yoox Group.
“Having joined forces with Yoox Group, the company will be bigger, stronger and superbly well positioned under Federico [Marchetti’s] leadership to lead the industry and create the future of fashion,” she said, adding, “As a continuing loyal customer I will be excited to see the next chapter for this amazing business.”
Following Massenet’s comments on Thursday morning, Federico Marchetti, founder and ceo of Yoox, told WWD exclusively: “As a fellow entrepreneur, I have to say ‘hats off’ to Natalie Massenet. I’d like to take this occasion to congratulate her for having created such a wonderful company with an exceptionally talented team of professionals. I am very excited to help write the next chapter in the future of Yoox Net-a-Porter Group and I wish Natalie all the best.”
The market reacted positively to the news of Massenet’s departure. At 2.30 p.m. on the Milan Bourse, where Yoox is traded, shares were up 5.16 percent to 27.90 euros, or $31.42 at current exchange rates, after being suspended earlier Thursday morning following an excessive rise.
“The fact that the operative control of the new group after the merger would remain mainly in the hands of Yoox and its ceo Marchetti was an evident factor,” Intermonte analysts commented on Thursday. “This on the one hand limits the impact of Massenet’s exit, while on the other hand could plausibly explain her choice. The news is marginally negative as it could suggest the risk that other talents may decide not to continue their collaboration after the merger. Another risk, more limited we believe, could be represented by Massenet herself, if she decides to begin new activities in the sector in the future.”
Massenet was said to be against the idea of merging with Yoox from the start, with sources saying she fought against Yoox’s earlier attempts to buy Net. The two online retailers have distinctly different cultures — Yoox is no-frills and profit-driven while Massanet always considered Net-a-porter a luxury jewel focused as much on customer service and editorial content as product.
It didn’t help that while Richemont said Massenet would have defined responsibilities in the new group, it was clear that Yoox founder Federico Marchetti, who would be its chief executive officer, would be the one steering the ship.
In an interview with The Financial Times in May, Marchetti, when asked who would be the boss of the combined entity, bluntly stated, “That’s me.”
When asked about her reaction to Marchetti’s comment in a New York magazine interview published in August, Massenet commented: “I don’t think I need to answer that,” adding, “ I just have to say that…if your article in any way insinuates any kind of rift or difficulty or am I leaving or am I staying here — I am here to talk about the business. I am chairman of the combined entity, I have a responsibility to a publicly listed company, and I am not here to be gossipy or salacious about anything.
On Wednesday, though, sources said the conflict was more between Massenet and Richemont than between her and Marchetti.
“This is more between [Johann] Rupert and Net-a-porter than between Massenet and Marchetti,” said a market source. “She resigned from her previous role, not from the new one, it’s [Richemont’s] problem.”
The source suggested Massenet “should have resigned when the deal was signed, as her [smaller] role was written black on white at the time of the merger.”
The source speculated that Massenet may have opted for leaving seeing that “she is a rich lady now, with 140 million pounds [received from Richemont] this summer.” That is equivalent to $214 million at current exchange.
A Milan-based luxury goods analyst also cited Massenet’s “comfortable 100 million parachute” and expressed no surprise at the news, noting that her new “marginal position, confined to an editorial and communications role, was hard to accept for the founder [of the site].”
The source said Rupert was “dissatisfied with Net-a-porter because it was not profitable, she was a journalist in the end and even Porter [the site’s glossy magazine] is losing money. That’s why Rupert relied on Marchetti, all powers went to him, he knows Net-a-porter will stop losing money. Marchetti is fully supported by the Richemont group.”
Armando Mammina, a Milan-based marketing and strategic consultant, had a different opinion of Massenet. “Net-a-porter was not a money-maker but was strategic, and had a key role in identifying trends and an influencer. Massenet is extremely talented, yes, she is a journalist, but she is a step ahead. [Yoox’s] Thecorner.com, after all, was inspired by Net-a-porter.”
Mammina wondered if perhaps Raffaello Napoleone, ceo of Pitti Immagine and interim president of Yoox Group, could perhaps take on the role of president of the new entity.
Massenet was a pioneer in online retailing, which in the year 2000 was still seen as a novelty and somewhat of a risk after the implosion of much-hyped sites like boo.com. Her aim was to bring a luxury retailer’s level of service — and taste — to e-tailing. Massenet proved that high-fashion brands such as Chloé, Stella McCartney, Marc Jacobs, Jimmy Choo, Balenciaga, Alexander McQueen, Tom Ford and more could be sold online to a global consumer. While profitability always remained a challenge for Net, sales grew to more than $1 billion last year.
She sold a minority stake to Richemont, which provided much-needed financial heft, and in 2010 the luxury goods group acquired control of Net in a deal that valued the firm at 392 million euros, or $522 million. But as Net continued to require a high level of investment — and to operate in the red — Richemont executives began to explore selling the e-tailer. Marchetti at one time revealed he’d been in talks with Richemont for years about buying Net. WWD reported in 2013 that the two companies were in talks, but at the time, industry sources said the discussions broke down because Massenet didn’t want to sell to Yoox.
Even after the merger was unveiled, there was disquiet among Net’s minority shareholders — who include current members of management — over Richemont’s valuation of the company. In March, the deal valued Net at 950 million pounds, or 1.44 billion euros, or $1.57 billion.
But following a later independent appraisal, in August Net’s minority shareholders secured a valuation of Net that was 50 percent higher than that originally set out in March. According to sources, the independent valuation is said to have been around 1.5 billion pounds, or $2.34 billion, a value that was 500 million, or $750 million, higher.
In an interview with WWD at the time of the new valuation, Carmen Busquets, the original investor in Net who worked with Massenet to launch Net, had cast doubts on how Massenet would work within the newly-merged company. Busquets said at the time that she believed Massenet should have been named co-ceo alongside Marchetti. “Natalie needs to have the respect she deserves,” said Busquets. And of the original valuation of Net, Busquets said: “How is it that companies that are losing money, companies that are not as well-known, are valued at three times Net’s revenues? Why are we being punished for being successful?”
Busquet also said at the time she had tried to back Massenet in a buyout earlier this year, which would have valued Net at 1.4 billion to 1.5 billion pounds, or between 1.92 billion euros and 2.06 billion euros, or between $2.11 billion and $2.27 billion, but Richemont rejected the deal
Following the news of the new valuation, analysts had also raised questions over Massenet’s role within the new group. In a report last month, Luca Solca, managing director at Exane BNP Paribas, noted that Massenet “does not appear to have a key role in the new company and does not seem particularly happy with the idea of a merger with Yoox,” he said. While Massenet was to have become executive chairman, Federico Marchetti, founder of Yoox Group, is to be chief executive officer of the new combined group.
