Amazon.com AMZN -1% is in talks to buy luxury online retailer Net-a-Porter but a deal is far from complete, FORBES confirmed on Thursday.
The negotiations, first reported by Women’s Wear Daily, could lead to Amazon’s largest acquisition ever. But the talks could still fall apart, as the negotiations remain in early stages, according to a person familiar with the situation. The person also said if a deal is completed, it is likely to be at a lower price than the 2 billion euros, or $2.19 billion, reported by WWD.
A spokesperson for Amazon did not respond to an email request for comment. A spokesperson for London-based Net-a-Porter did not return a phone call requesting comment.
Amazon has long coveted the high-end fashion retail sector and any deal for Net-a-Porter, which is owned by Swiss firm Compagnie Financière Richemont , would represent a new commitment to an area where the Seattle e-commerce giant lacks a commanding presence. Earlier attempts by Amazon to enter the luxury apparel market, where margins can be much higher than in Amazon’s core business, have failed. In 2006, it acquired women’s fashion site Shopbop, before retooling it to focus on designer brands. In 2012, the company went on a press blitz, with CEO Jeff Bezos stating that Amazon was making a “significant” investment into luxury brands.“It’s Day 1 in the category,” Bezos then told The New York Times. “[Our job is to ensure] the designer brands are happy.”
But the push has largely failed, as customers typically associate Amazon with discounts and fast-shipping, not pricey luxury goods. Founded in 2000 by Natalie Massenet, Net-a-Porter posted sales for the 12 months ending on March 29, 2014 of about $835 million, up almost 23% from the previous year. Losses in that period were just over $20 million, down from the $31 million loss in the 12 months prior.
If Amazon were to shell out anywhere close to $2 billion for Net-a-Porter, the deal would be the company’s largest acquisition ever. Last August, Amazon spent about $1.1 billion in cash on video game streaming company Twitch. In 2009, it spent $1.2 billion to acquire online shoe retailer Zappos.
Still, it could be a long time before Amazon closes the deal, if that even happens. Late last year in a similar type of rumor, Indian media outlets reported that Amazon would buy local e-commerce company Jabong for more than $1 billion. That deal has yet to materialize, and some sources confirmed to FORBES that it is unlikely to happen.
Outside of Twitch and Zappos, Bezos is not known for splashing his company’s cash on expensive targets as companies like Microsoft MSFT -0.6% and Google have done in the past. It remains to be seen what happens with Net-a-Porter and WWD summed it up best: “As in any discussion, the talks may or may not lead to an actual deal.”
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