Luxury online store Richemont Net-A-Porter is leaving China

Richemont’s luxury e-commerce platform Yoox Net-A-Porter is pulling out of China as weak consumer spending increasingly weighs on the business of high-end brands in the world’s second-largest economy.

The digital retailer known as YNAP plans to focus investments and resources on its core and more profitable geographic areas, a Richemont spokesman said in an emailed statement.

Net-A-Porter’s operator in China, a joint venture between YNAP and Alibaba Group Holding Ltd. called Feng Mao, is in liquidation, according to people familiar with the matter who asked not to be identified discussing internal decisions.

Alibaba did not immediately respond to a request for comment, while Richemont did not comment on the joint venture.

YNAP’s departure comes as China’s middle class, an important source of revenue for global luxury brands, becomes more cautious with its spending. Weaker prospects following the country’s economic downturn have reduced household wealth and increased youth unemployment. Some high-end brands have been hit by rising returns and order cancellation rates on e-commerce platforms, while others are resorting to deep discounts to boost sales.

Richemont, the Swiss luxury group, continues to seek to sell a majority stake in YNAP after an earlier deal with Farfetch Ltd. fell through, as reported in its May profit and loss statement. Talks are being held with potential buyers and the group expects to reveal more before the end of the year, it said at the time.

Net-A-Porter entered the China market in 2013 but has since struggled to gain share in the highly competitive digital market. Its sister platform Outnet was withdrawn from China in 2015.

E-commerce sellers have been hit hard by China’s post-Covid economic slowdown as consumers shifted from buying expensive products to looking for deals. Spending during major shopping holidays and festivals this year remains low.