- ‘Milestone’ deal in luxury branded jewellery strategy
- Roberto Coin is sixth biggest jewellery brand in US
- Earnings and margin-enhancing acquisition
Watches of Switzerland (WOSG) has splashed out $130 million (£104 million) to buy Italian handcrafted jewellery business Roberto Coin Inc in a deal that skews the FTSE 250 firm’s sales mix a bit more towards the lucrative branded jewellery market.
Shares in high-end timepiece seller Watches of Switzerland have fallen almost 60% over the past year, much of the damage done by a post-Christmas profit warning.
But the stock ticked up 1% to 328p on hopes this acquisition can help Watches of Switzerland stoke additional sales growth in the face of a wider slowdown in luxury goods demand.
COINING IT IN
Founded in Vicenza, Roberto Coin is an Italian luxury jewellery brand, renowned for its handcrafted fine jewellery and unique ruby signature.
A partner of Watches of Switzerland for over a decade, Roberto Coin is currently the sixth largest brand in the US by sales and retail, distributing to independent and chain jewellery stores including Watches of Switzerland’s Mayors outlets across the pond and major department stores such as Saks and Bloomingdales.
The acquired business, which generated sales of $138.7 million and profits of $30.2 million in 2023, has the exclusive rights to import and distribute Roberto Coin jewellery throughout the US, Canada, Caribbean and Central America.
Rolex-to-TAG Heuer seller Watches of Switzerland explained that luxury branded jewellery is a core pillar of its growth strategy, pointing out that the trend within the global luxury jewellery market is towards branded jewellery, which made up 27% of the market in 2024, up from 17% in 2019.
‘In line with the group’s track record of successful previous acquisitions, we expect to deliver a smooth integration of Roberto Coin Inc into the group,’ said Watches of Switzerland.
While the deal ups the group’s leverage, Watches of Switzerland insisted the acquisition will immediately enhance both margins and earnings per share.
WHAT DID THE CEO SAY?
CEO Brian Duffy said: ‘We have partnered with Roberto Coin for over a decade in the US, retailing its elegant jewellery in a number of our Mayors’ showrooms. It is a hugely popular, growing brand, occupying a strong position in the market, underpinned by product quality, design creativity and imagination.’
He added: ‘The luxury branded jewellery category has consistently outperformed the wider jewellery sector, and we see further strategic and operational opportunities for the business within the broader group. Today’s strategically and financially attractive acquisition is indicative of our ambition and the momentum we are building in this exciting category. It will allow us to take one of the fastest growing jewellery brands in the US and use our retail and operational expertise to accelerate growth and further elevate the Roberto Coin proposition in North and Central America.’
THE JEFFERIES VIEW
Jefferies noted the deal has been done on attractive terms, with Watches of Switzerland paying less than one times trailing sales for a business with healthy margins.
‘Concerns around the wholesale nature of the target should be weighed against the retention of the Roberto Coin management talent, the channel expertise of Watches of Switzerland’s leadership team and a likely rapid cash pay-back to come,’ enthused the broker.
