Luxury etail group Net-a-Porter’s revenue increased 22.8% to a record £654m in the year to March 31, but analysts warned it will face increased competition in coming years as brands invest in their own online offering.
The spike in sales was driven by strong growth at all three of the group’s sites, Net-a-Porter.com, TheOutnet.com and MrPorter.com. The strongest growth rate was in the final quarter of the year, when sales increased by 33%.
Group pre-tax profits swung to £11m from a loss of almost £10m the year before as it sold more products at full price, driving the profit margin up from 44.1% to 45.3%. EBITDA rose from £37.8m to £54.2m.
During the period, the company invested £13.8m in IT improvements to the three websites, particularly the mobile and tablet offering, which increased by 46% and now represent 35% of total sales. The three sites had 887,000 active customers, up from 698,000 the year before.
The accounts were published at Companies House this week, less than three months after Net-a-Porter signed a merger deal with Italian etail rival Yoox. The merger, which will create a company with a combined turnover of at least €1.3bn (£940m), is expected to complete in September.
Net-a-Porter was founded in 2000 by Natalie Massenet. Last year it had a 13.6% share of the online luxury pure-play etail market, according to research firm Verdict. This will grow following the merger.
However, Verdict’s lead analyst for clothing and footwear Honor Westnedge warned the luxury etail giant not to become complacent.
“Joining forces with Yoox puts it in a stronger position; it’s going to have a lot more buying power and sway with brands and it will be able to get products in faster than its competitors.
“But over the next five years it will face a growing threat from those brands, who are following in Burberry’s footsteps and starting to invest more in online. Net and Yoox combined have great resources, which currently outpace the brands, but they can’t rest on their laurels.”
Massenet said in a statement: “We will strive to remain one step ahead of the game and continue to be the leading destination for fashion content and commerce.”