Shares in luxury timepiece retailer Watches of Switzerland’s (WOSG) got a modest boost on news it had acquired publishing firm-to-luxury watch platform Hodinkee.
The purchase of a media company by a retailer might look a bit odd at face value. However, the Patek Philippe-to-Audemars Piguet seller clearly believes that by doing so it can accelerate online growth and grab a greater share of America’s expanding high-end watch market.
Described by Watches of Switzerland as a ‘go-to, global destination for luxury watch enthusiasts’, New York City-headquartered Hodinkee offers digital print and video content, not to mention limited edition watch collaborations alongside watch and jewellery insurance services.
As such, it could help its new parent to capture market share across the pond. The deal, the value of which has not been disclosed, looks to have been funded out of existing cash as it is not expected to have any impact on the company’s borrowing pile.
Hodinkee was founded as a watch blog in 2008, but has morphed into an influential editorial and e-commerce site for wristwatches with an engaged audience of 22.2 million annual unique visitors to its website and over one million social media followers.
Once the deal completes, Watches of Switzerland will integrate Hodinkee’s existing commercial activities with its in-house US e-commerce site, giving the FTSE 250 firm access to a captive and engaged luxury watch audience. It will also tie-in Hodinkee’s insurance activities with Chubb (CB:NYSE).
Watches of Switzerland was at pains to point out Hodinkee will retain its editorial independence and the platform’s founder Ben Clymer will return to lead its operations after stepping down as CEO in December 2020.
In a trading update on 3 September, Watches of Switzerland said it believed the market for high-end timepieces and jewellery has bottomed out in the UK and confirmed it is on track to deliver its full year 2025 guidance.
Shore Capital analyst Clive Black sees the Hodinkee deal as ‘a sensible bolt-on move adding to the group’s capabilities as it focuses down on the UK and US markets. Watches of Switzerland had a quite torrid 2023/2024 and central to a recovery in its rating is meeting forecasts on an ongoing basis, noting continued investment in the portfolio of stores and the Coin and now Hodinkee acquisitions.’
Black adds: ‘Comparatives are now more favourable, which may yet be the springboard to a better financial performance and stock price, the key to delivery being the prospect of sequential annual earnings progress.’
The development shows how retailers are having to be more creative and innovative in the way they reach customers, with tailored content helping to push people into purchasing decisions.
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