he Movado Group held its annual “summit” last March in Davos, Switzerland, just a few days ahead of Baselworld. Some 500 representative of the professional watch community, aficionados and press from 40 countries (including Europa Star) attended the event. According to CEO Efraim Grinberg, the group spent around $2 million for the 3-day summit in the Swiss mountains, against about $10 million previously when it was an exhibitor at the Basel fair, which it left in 2017.
Despite the waves created by the arrival of the Apple Watch, the Movado Group remains a key player of the industry in the mid-range as well as in the fashion watch segment (it operates a number of licences, including Lacoste and Hugo Boss). Movado is the best-selling brand in the $500 to $2,000 segment on the US watch market. The American group, headquartered in New Jersey, has a portfolio of 11 brands*, including its latest acquisitions, fashion brands MVMT (which it purchased for approximately $100 million in 2018) and Olivia Burton (acquired in 2017 for $79 million), both attractive to millennial consumers.
- Movado is the best-selling brand in the $500 to $2,000 segment on the US watch market
The fourth quarter of the 2019 financial year brought some good news, with an increase in net sales of 33.6%, producing a total of $199.4 million and an operating income of $17.1 million versus $13.3 million in the previous period. A comprehensive reorientation of the Movado Group towards connected technologies, digital sales and the acquisition of the next generation’s brands is intended to help it keep up with new buying habits and tastes or, in other words, to stay relevant. During the Davos summit, Movado announced the brand’s next generation smartwatch, the Movado Connect 2.0, featuring Google’s latest software, with new functionalities.
A comprehensive reorientation of the Movado Group towards connected technologies, digital sales and the acquisition of the next generation’s brands.
“Fiscal 2019 marked another year of progress on our strategies – to deliver innovation across our portfolio of powerful brands in an omni-channel market, capitalise on our strong balance sheet and cash flow to acquire new brands and develop our digital presence,” said Efraim Grinberg. For 2020, the group anticipates net sales of between $750 million and $765 million, with operating income from $82 million to $85 million. We met Mr. Grinberg during the Davos Summit for an interview.
- Efraim Grinberg, Chairman and CEO of the Movado Group
Your market is very volatile; we see a constant stream of newcomers appearing on platforms such as Kickstarter. What is your strategy for staying relevant in the fashion watch segment?
Despite this competition, our fashion brands did very well through the beginning of the year. Our partners are very advanced in terms of digital footprint and ambassadors, for instance with Hailey Baldwin, Gigi Hadid and Zendaya at Tommy Hilfiger. This helps us a lot with promoting the watches, as the connection with the consumer is really strong. At the same time, we acquired two brands, Olivia Burton and MVMT, to reach a critical mass of new consumers. We are learning a lot with the newest brands and we can still learn a lot from our fashion partners, as they are big brands adapting to a changing landscape. So we strongly believe we can achieve organic growth both with the licensed brands and with our newest brands.
“We acquired two brands, Olivia Burton and MVMT, to reach a critical mass of new consumers. We are learning a lot from them.”
Another big change in your segment is the arrival of the Apple Watch. Your strategy has been to develop your own set of smartwatches, and you’ve just released the latest generation of Movado Connect. Is your future with the smartwatch, or with the traditional analogue quartz watch?
First, for us, it’s not about functionality; it’s all about emotion. Even in the smartwatch segment, it will always be products that primarily aim at connecting emotionally with the consumer. Apple has its own business, we are not in the same segment. This is why our first generation of Movado Connect was successful: it was a true Movado product. So I don’t believe that our future is in the connected world – it rather represents one side of our business. The analogue watch segment has always been the most sustainable part of our business. And we can create innovation in this segment too!
- Movado 1881 Automatic
A “hot potato”, especially in your price segment, is the future of watch distribution in terms of digital and/or offline sales. The brands you just acquired are very strong online. What is your vision of this critical aspect of the industry?
My focus is omnichannel. I do believe that brick-and-mortar stores are essential, but they have to be conceived differently; they must incorporate the digital experience. We make sure to help all of our retail partners to interact better with their consumers digitally. In this sense, we support them with content, advertising and all kinds of digital initiatives. For instance, we have equipped the stores in key markets selling Scuderia Ferrari timepieces with race simulators, and we supply digital tools to help you identify the best Hugo Boss or Tommy Hilfiger for you.
You also operate higher-end classic watch brands, including Ebel and Concord. Many analysts see a strong divide today between a dozen or so very successful top brands and “the rest”, which are encountering more and more difficulties in terms of awareness and sales. How do you cope with this fierce competition?
We try to focus on the markets where these brands perform well. Ebel is particularly strong in the Middle East, so we put a substantial part of our investment in that region. Other important markets for Ebel are Germany, the UK and Switzerland. This year, we introduced redesigns of the Brasilia and Beluga lines and we extended the Sport Classic line for Ebel.
“I don’t believe that our future is in the connected world – it rather represents one side of our business.”
- Ebel Sport Classic Lady Green
At a group level, which countries have the highest growth potential, outside of the USA?
Before the addition of MVMT, Europe was our largest market overall. Now, we believe there are a lot of opportunities for us in China. It will not be a smooth ride, but in terms of e-commerce, there are a lot of opportunities for us.