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 verge of rejoining the Prime 10 Swiss luxurious watch manufacturers.
Now Georges Kern, who stop a prime job at luxurious emporium Richemont to steer the revival, is open to acquisitions to assist different watch manufacturers comply with Breitling’s rejuvenation path. Whereas he will not reveal particular targets, Kern says he can name on CVC’s deal-making data and his personal expertise to show round a struggling model.
“We’ve got a warfare machine, proper?” Kern, Breitling’s chief government, mentioned in an interview, referring to CVC. “Something we might think about, you already know, you plug it in and you’ve got big leverage.”
On the floor, non-public fairness and Swiss watches will not be an apparent pairing. One focuses on maximizing profitability and decreasing prices, whereas the opposite depends on extremely expert staff, giant advertising and marketing budgets, and costly investments for in-house developed actions to construct model cachet.
However Kern says the velocity with which expert homeowners like CVC can execute change and the rising demand for Swiss watches make it an business ripe for consolidation. At Breitling, he overhauled the enterprise by opening fashionable boutiques world wide, enhancing the portfolio and hiring model ambassadors together with Adam Driver and Charlize Theron.
For now, the largest manufacturers within the business are at arm’s size, remoted in possession constructions that make takeovers almost unimaginable. Market chief Rolex is privately owned and guarded by a fancy belief construction, similar to family-controlled Audemars Piguet, maker of the favored Royal Oak watch, and Patek Philippe. Many different manufacturers, from Vacheron Constantin to Tag Heuer to Omega, are owned by luxurious conglomerates.
On the time of the takeover, Breitling was owned by the Schneider household who, in 1979, purchased the model that had been based by Leon Breitling within the Jura mountains of Switzerland in 1884. These days, there will not be many Swiss watchmakers that stay impartial. These embrace the likes of Oris or area of interest producers like H. Moser & Cie or FP Journe.
Luxurious conglomerate Kering went the opposite approach earlier this 12 months, promoting its two watch manufacturers — Girard Perregaux and Ulysse Nardin — after it did not see them as a pure match for its roster of trend manufacturers.
At Breitling, Kern streamlined the catalog and distribution channels with roughly 200 model boutiques, together with 40% company-owned. As soon as recognized for over-polished and outsized pilot’s watches, Breitling has refocused on fashionable interpretations of historic fashions, together with its Navitimer chronograph, Eighties-inspired Chronomat, and up to date colourful variations of the Superocean diving watch.
The technique pays off. Breitling has posted gross sales of round 700 million Swiss francs in 2021 – greater than 40% development within the business, based on Morgan Stanley and LuxeConsult. Gross sales are up one other 25 p.c in worth to date this 12 months, based on folks conversant in the matter. The worth of the enterprise has grown to effectively over $3.1 billion from about $780 million 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 p.c, with the corporate’s managers and administrators, together with Kern, holding about 10 p.c and CVC the remaining two-thirds.
Kern mentioned Breitling, like many different prime manufacturers, is reaping rewards from the present renaissance of Swiss mechanical watches, which has taken maintain through the pandemic, as cash-strapped customers have begun lusting after the costly timepieces on Instagram and different social web sites. (Kern, 57, is himself a significant presence and prolific poster on the community, with some 51,000 followers).
Breitling’s common retail value is now round $6,100 as the corporate makes use of extra gold, stones and valuable metals, in addition to in-house developed actions, a pattern that has additionally been utilized by rival manufacturers. That is up from about $5,000 in 2017. The corporate has raised costs about 5 p.c this 12 months, a response due partially to rising uncooked materials and vitality prices.
The rise in demand for luxurious watches was largely pushed 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.
Nevertheless, it took many years of Swiss business effort and a whole lot of hundreds of thousands in funding to persuade “a Midwestern man in an oil discipline in his pickup truck to commerce his Timex for a proper time,” Kern mentioned.