November 26, 2022

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Four months on from completing the management buyout that may come to define his career, Patrick Pruniaux can just about admit it to himself. “I was talking to a friend of mine that I met as a student almost 30 years ago, and he said I’d always wanted to be an entrepreneur,” he says. “I was happy in my corporate life, but deep inside, yes, I think I always had that ambition.”
On May 31, the 50-year-old Frenchman and a group of private investors completed a management buyout of the Sowind Group, the holding company for the high-end Swiss watch companies Ulysse Nardin and Girard-Perregaux — until then, owned by the French luxury conglomerate Kering.
The sums behind the deal, which included the currently dormant brand Jean Richard, were not disclosed, but Pruniaux, who had been Ulysse Nardin and Girard-Perregaux’s chief executive, says he is now the main shareholder. Kering declared €29mn of capital gains from asset disposals related to the sale in its half-year report at the end of July.
Ulysse Nardin and Girard-Perregaux have more than 400 years history between them. However, judging by figures produced by Morgan Stanley, they have been in freefall for years. Revenues at Ulysse Nardin have halved since 2018, according to the financial services company’s estimates, while Girard-Perregaux is now so small that it is no longer ranked among Switzerland’s top 50 dial names.
Nevertheless, Pruniaux, who left Apple in 2017 to join Ulysse Nardin, is bullish. “We are growing at more than 40 per cent,” he says of his group’s performance this year. “We are going to be back to 2018 numbers,” he adds — without, however, disclosing any specific figures.
If Morgan Stanley’s calculations are correct, though, that would put Ulysse Nardin’s revenues in the region of SFr110mn and Girard-Perregaux’s at around SFr60mn.
“Over the last couple of years, we’ve done very significant market cleaning, closing down distribution and buying back product,” says Pruniaux. “When you buy back product, you withdraw that amount from your revenue.”
Some experts believe Pruniaux and his investors have a battle on their hands. “Girard-Perregaux is no longer in the big league,” says Oliver Müller, founder of the Swiss luxury consultancy LuxeConsult and one of the authors of Morgan Stanley’s annual industry reports. “It now has to find a virtuous dynamic that will allow it to grow again after a decade of continuous decline.”
The sale had been rumoured for years and was widely seen as an acknowledgment by Kering that it could not compete in the high-end watch category.
Kering, owner of fashion brands such as Gucci, Saint Laurent and Balenciaga, said in May that it would give priority to the houses with the potential to become “sizeable assets within the group, and to which it can provide decisive support over time”.
Analysts were not surprised the group let the venerable watchmakers go.
“The two brands were too small to move the needle,” says Erwan Rambourg, head of consumer retail and research at HSBC. “They were a rounding error. Kering came to the conclusion they shouldn’t spend as much time on those assets.”
Pruniaux believes the brands’ newfound independence can catalyse growth. “We see a clear appetite for independent brands,” he says. “Watch lovers, diehard collectors and new customers are getting interested in watches that are less mainstream. We are not and will never be mainstream. We will not go over 25,000 units for Girard-Perregaux, and not over 15,000 for Ulysse Nardin.”
Rob Corder, co-founder of the specialist publication WatchPro, agrees with the approach. “It was deemed by management that they could turn it into a more profitable business being independent,” he says. “And, when you look at the brands growing fastest, such as Breitling and Audemars Piguet, it’s the independents that have been most successful over the past few years.”
Pruniaux says he is running waiting lists of at least a year on some models, such as the Girard-Perregaux Laureato, a 1970s stainless steel luxury sports watch that has seen a recent surge in popularity. Interest in Ulysse Nardin’s Freak watches is high, too, he says.
A good sign, perhaps, but Pruniaux is not happy. “It’s nothing to brag about,” he says. “We’re working to lower that wait, but it’s hard. We are a manufacture, with a very high level of craftsmanship. We can’t just press a button and produce more.” He says he has added 50 staff this year, including a number of watchmakers recruited from “very reputable brands”.
Retailers are talking positively. “Laureato has been a tremendous success and we can’t get enough of it,” says Brian Duffy, chief executive of the Watches of Switzerland group. “There’s room for both brands to be much bigger than they are today.”
Further growth may come from Asia. By the year end, Pruniaux says he will have opened 20 monobrand boutiques in China, split evenly between the two makers, having previously had none.
His Asian customers give him hope. “Today, the average age for Ulysse Nardin in Asia is below 35,” he says. “South-east Asia is very dynamic, and we’re expanding very nicely in Asia. We’re investing in China, but with very exclusive distribution.”
While the Swiss watch industry has yet to feel the effects of the global economic turmoil, some believe troubled stock markets and rising inflation could pose a danger to lower profile brands. “There is this theme that big is beautiful in times of crisis, which are a lot rougher on smaller assets,” notes HSBC’s Rambourg.
Confidence may not be the most reliable currency in Swiss watchmaking, but Pruniaux the entrepreneur still has plenty of it. “We have proven the naysayers wrong,” he says. “Otherwise we would have failed already.”
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