Yoox CEO sees stable sales growth, rising profits in 2014

MILAN Wed Mar 5, 2014 1:40pm EST

MILAN (Reuters) - Italian online fashion retailer Yoox (YOOX.MI) expects stable sales growth in 2014 and a pay off this year from its investment in China, the company's chief executive said on Wednesday.

"We expect the pace of growth in 2014 to change little compared with what we saw in 2013, with sales rising at a percentage in the low 20s," Chief Executive Federico Marchetti told Reuters. Analysts have forecast about 22 percent growth.

Yoox, which runs its own multibrand websites and powers online shops for brands including Armani and Yves Saint Laurent (PRTP.PA), said in February sales rose 21.2 percent in 2013.

Yoox said it also expected profits to grow in 2014, as it takes advantage of a growing trend for online luxury shopping, which Bain & Co calculated would be worth 10 billion euros in 2013. That would be 5 percent of the market and larger than luxury sales for all of Germany.

Net profit in 2013 was up 23.9 percent at 12.6 million euros.

Europe accounts for over 60 percent of Yoox's sales, but Marchetti said the company saw opportunities to grow abroad, especially in China, Hong Kong, South East Asia and Japan.

"We expect Asia Pacific to grow at an above average rate in 2014," Marchetti said. The company said Japan's contribution to growth is measured at constant exchange rates.

China, a young online market which Yoox counts among "other countries" that contribute under 5 percent of sales, will grow at a faster than average rate in 2014, Marchetti said.

In January, the company opened up two of its monobrand websites - for Stella McCartney and Alexander McQueen (PRTP.PA) - in China and Marchetti said more would follow.

"The long-term approach we have taken in China is working, we hope to reap the fruits in 2014," he said.

Sales rose in all Yoox's markets in 2013. Its native Italy grew fastest in the fourth quarter at 31.3 percent, despite the country's struggles to emerge from recession and weaker internet infrastructure than some of its neighbors.

"Italy is traditionally behind the European average in internet infrastructure, but we see the Italians as more accustomed than anyone else to shopping on smartphones," Marchetti said.

"We think Italy can continue to grow at a sustained pace."

FEELERS OUT

Yoox operates a joint venture with Kering under which it manages websites for seven of the luxury group's brands.

Marchetti said the company was looking at opportunities for other industrial agreements, saying "there is a good chance we could sign other important agreements in the near future."

Rumors swirled late last year around a possible merger of the company with online fashion peer Net-a-Porter, prompting both Yoox and Net-a-Porter owner Richemont (CFR.VX) to deny talks of a deal.

Marchetti said Yoox's industrial plan did not envisage any mergers or acquisitions, but he said the company had not excluded the possibility.

"Our job is to evaluate opportunities on a case-by-case basis. We have to have our feelers out."

He added, "We don't have our feelers out to sell, at most we have our feelers out to acquire."

(Reporting by Isla Binnie; Editing by Tom Heneghan)

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