Luxury retailer Yoox Net-A-Porter on course despite profit drop

Online luxury retailer Yoox Net-A-Porter has shown increased sales in the Middle East across 2017, but its profit did suffer. Nevertheless, the fashion retailer believes it will reach its five-year target.

Positive growth in core markets and activities

Its 2017 performance and 2018 prognosis strengthen Yoox Net-A-Porter’s belief that it will reach its forecast for 2020. It will not only reach those goals, but also improve its profit margin 30 to 70 points this year, according to CEO Federico Marchetti’s statements to Reuters.

Yoox Net-A-Porter’s 2017 turnover grew 17 % to 2.1 billion euro and its EBITDA jumped from 143.4 to 156.5 million euro. That prompted the company to estimate that its fashion web shops will also have an increased gross margin in 2018. Backed by a strong performance in the Middle East, the company had growth in every core market and activity.

Nevertheless, its net profit plummeted 49 % to 17.3 million euro because of negative exchange rate fluctuations. CEO Marchetti still believes the company can grow its turnover 17 to 20 % by 2020, if exchange rates remain stable. Its profit margin should also grow 11 to 13 %, although it will most likely approach 11 %.

More than half of purchases through smartphone

The company, which will transfer to luxury watch maker Richemont this year, wants to invest more on mobile shoppers and luxury items like watches and jewelry: “We will invest more money in our apps’ upgrade and redesign and will continue to grow every month when it comes to mobile sales”, Marchetti said.

More than half of its sales came through smartphones for the first time in 2017. Yoox Net-A-Porter therefore considers app sales to be a core part of its strategy. The online fashion group has 3.1 million active customers nowadays.