The online luxury retailer is headed for a listing that will value it at $2.2bn © Mytheresa

The messy dismembering of bankrupt US retailer Neiman Marcus left hedge funds scrapping over the entrails and landed one with a fraud and extortion charge. Now online luxury unit Mytheresa, the jewel in the crown, is headed for a listing that will value it at $2.2bn, more than quadruple bids proffered in 2019.

The sort of luxury threads peddled by the Munich-based business have been left on the rack in the past year. The pandemic has squashed sales: to the tune of 9 per cent at same stores in the third quarter for Burberry and 40 per cent year on year in the first half for Prada. Consultancy Bain calculates that the whole market contracted by nearly a quarter last year, to €217bn; yanking profitability down 60 per cent.

Luxury is now a volatile sector. Mytheresa’s IPO prospectus offers a glimpse of 21st-century potholes: search engines switching up algorithms, China’s propensity to take offence, influencers turning bad and further disintegration of the EU to name just four.

Column chart showing estimated average profits for the luxury sector in 2020 and 2021

Ecommerce, meantime, has boomed during the pandemic: eMarketer estimates global sales rose 28 per cent to more than $4tn in 2020. But it has not been immune, suffering supply chain disruptions. Winning customers remains an expensive business, especially in China, the rare bright spot for luxury right now. Mytheresa’s cost per customer dropped from 2018’s €248 to €173 last fiscal year. In the same year it added 86,000 active customers to a total of 486,000. But competition for influencers — a key form of marketing — means prices are rising.

Line chart and lollipop chart showing Mytheresa's net sales, operating income and net income for 2018, 19 and 20 plus cost of customer acquisition from 2016 to 2020

Mytheresa’s own shares are priced at $26 apiece, the top of its targeted range. Richemont’s 2018 acquisition of Yoox Net-a-Porter leaves Farfetch the nearest listed comparison. While the Anglo-Portuguese group is in the red, unlike Mytheresa, stakes taken by Chinese heavyweights such as Alibaba should give it a leg-up in the biggest luxury market. As a multiple of sales Mytheresa is priced at roughly a third of the cultish Farfetch’s 14 times. Even so, this is a better deal for departing private investors than newbies.

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