Within the 5 years since CVC Capital Companions purchased management of Breitling, the corporate has greater than quadrupled its fairness worth and is on the cusp of re-joining the Prime 10 Swiss manufacturers of luxurious watches.
Now Georges Kern, who gave up a high job at luxurious emporium Richemont to guide the revival, is open to acquisitions to assist different watch manufacturers observe Breitling’s path of rejuvenation. Whereas he gained’t disclose particular targets, Kern says he can name on CVC’s deal-making savvy and his personal expertise to show round a struggling model.
“We have now a battle machine, proper?” Kern, Breitling’s chief government officer, mentioned in an interview, referring to CVC. “No matter we might think about, , you plug it in and you’ve got enormous leverage.”
On the floor, non-public fairness and Swiss watchmaking aren’t an apparent pairing. One is targeted on maximising returns and lowering prices, whereas the opposite depends on extremely educated employees, large advertising and marketing budgets and costly investments for in-house developed actions to construct model cachet.
However Kern says the pace at which nimble house owners like CVC can execute change and the surge in demand for Swiss watches make this an trade ripe for consolidation. At Breitling, he’s overhauled the enterprise by opening trendy boutiques around the globe, sharpening the portfolio and hiring model ambassadors together with Adam Driver and Charlize Theron.
For now, the most important manufacturers within the trade are out of attain, insulated in possession constructions that make takeovers all however unattainable. Market chief Rolex is privately held and guarded by a fancy belief construction, as are family-controlled Audemars Piguet, the maker of the favored Royal Oak timepiece, and Patek Philippe. Many different manufacturers, from Vacheron Constantin to Tag Heuer to Omega, are owned by luxurious conglomerates.
On the time of its takeover, Breitling was owned by the Schneider household which, in 1979, purchased the model that had been based by Leon Breitling in Switzerland’s Jura mountains in 1884. Nowadays, there aren’t many Swiss watchmakers that stay unbiased. Amongst them are the likes of Oris or area of interest producers like H. Moser & Cie or F.P. Journe.
Luxurious conglomerate Kering went the opposite approach earlier this 12 months by promoting its two watch manufacturers — Girard Perregaux and Ulysse Nardin — after seeing no pure match for them in its roster of vogue manufacturers.
At Breitling, Kern streamlined the catalog and distribution channels with about 200 branded boutiques, together with 40 per cent which can be firm owned. As soon as recognized for overly polished and out-sized pilot watches, Breitling refocused on trendy interpretations of storied fashions together with its Navitimer chronograph, its Eighties-inspired Chronomat and up to date colourful variations of the Superocean dive watch.
The technique is paying off. Breitling posted gross sales of about 700 million Swiss francs in 2021 — an trade beating improve of greater than 40 per cent, in accordance with Morgan Stanley and LuxeConsult. Gross sales are up one other 25 per cent by worth thus far this 12 months, in accordance with individuals conversant in the matter. The worth of the enterprise has jumped properly above $3.1bn from about $780m on the time of the takeover, Bloomberg reported final 12 months.
In 2021, Swiss investor Companions Group purchased a minority stake in Breitling. It now owns about 23 per cent, with firm managers and executives, together with Kern, proudly owning about 10 per cent and CVC the remaining two-thirds.
Kern mentioned Breitling, like many different high manufacturers, is reaping rewards from the present revival in Swiss mechanical watches that took maintain throughout the pandemic as cash-flush customers caught at residence started lusting over dear timepieces on Instagram and different social media websites. (Kern, 57, is himself is a significant presence and prolific poster on the community, with some 51,000 followers).
Breitling’s common promoting worth is now about $6,100, as the corporate makes use of extra gold, treasured stones and metals in addition to in-house developed actions, a pattern that’s been employed by rival manufacturers as properly. That’s up from about $5,000 in 2017. The corporate raised costs by about 5 per cent this 12 months, a response due partly to rising uncooked materials and power prices.
The surge in demand for luxurious watches has been pushed, largely, by customers within the US, the place Breitling is well-known and which overtook China final 12 months as the highest marketplace for Swiss watch exports.
Nonetheless, it’s taken a long time of effort by the Swiss trade and lots of of thousands and thousands in funding to persuade “a man within the Midwest on an oilfield together with his pickup to alter his Timex into a correct watch,” Kern mentioned.
