Richemont said today that online luxury fashion retail platform Farfetch would acquire a 47.5% stake in the luxury goods group's loss-making online fashion retailer YOOX Net-A-Porter (YNAP), adding that Emirati businessman Mohamed Alabbar would take 3.2%.

The maker of Cartier jewellery and IWC watches also said it expected a €2.7 billion writedown.

"The carrying value of this investment will be written down to the expected fair value less costs to sell, resulting in a non-cash charge to Richemont consolidated income statement estimated at €2.7 billion," it said.

The deal between Richemont, Farfetch and Symphony Global, an investment vehicle of Mohamed Alabbar, also laid the path towards Farfetch potentially acquiring the remaining shares in YNAP, it said.

The deal comes amid a flurry of industry-wide investments in digital services as luxury players shrug off past skepticism and embrace new channels to reach customers, spurred by a faster shift to online consumption during the pandemic.

"Excellent news for Richemont, at last. The deal closes years of underperformance and heavy investment in YNAP," Vontobel analyst Jean-Philippe Bertschy wrote in a note, recommending the stock as a "buy".

Richemont had said in November it was in talks with Farfetch about selling a minority stake in YNAP and said it was trying to get other investors on board.

The agreement clears the way for Richemont brands and YNAP to switch to Farfetch technology and to boost the watch and jewellery offer on Farfetch's own retail site, with the addition of Richemont brands.

Richemont has invested heavily in YNAP over the years, but its online distributors, which also include watch marketplace Watchfinder, still had an operating loss of €210m in the fiscal year to March.