Swatch takes majority stake in Dubai retailer Rivoli

By Silke Koltrowitz

ZURICH (Reuters) – Global watchmaker Swatch (VTX:UHR) has taken control of Dubai’s Rivoli retail chain, the latest luxury group to take a closer interest in its emerging markets outlets in order to use local knowledge to manage its image and better profit from rapid regional growth

Swatch Group raised its stake in the Dubai retail group to 58 percent, taking over Rivoli’s network of outlets in the fast-growing Middle Eastern market.

Under the deal, the Swiss watch maker bought an additional 18 percent of Rivoli from the private equity arm of Dubai Holding, owned by the emirate’s ruler, via its subsidiary Technocorp Holding for an undisclosed amount, Swatch Group spokeswoman Beatrice Howald said on Monday.

ZKB analyst Patrik Schwendimann said he estimated the purchase price for the 18 percent stake at about 100 million Swiss francs ($110 million).

Luxury goods groups have been increasing control of their retail networks in Asia, Russia and the Middle East by opening directly operated stores, buying back franchises and taking stakes in retail partners to maximise growth in these markets.

By taking over operations in emerging markets, global brands can design stores, decide how their goods are displayed and marketed while also tapping into local knowledge to ensure they are in tune with customers’ tastes.

Luxury brands that have bought out their retail partners include Gucci (PAR:PP) Hermes (PAR:RMS) and Prada (HKG:1913) in Russia and Burberry (LSE:BRBY) in China and Japan.

Under the deal announced on Monday, Swatch, the world’s largest watch group, which makes Omega, Longines and Tissot watches in addition to the fashion watches which bear its name, will take control of Rivoli’s network of over 360 retail businesses with over 1,500 employees in the Middle East.

The Middle East has been one of the fastest-growing markets for Swiss timepieces, at least partly making up for a slowdown in demand in China.

WATCH EXPORTS

Swiss watch exports to the United Arab Emirates rose more than 13 percent in the 10 months to October, making it the tenth biggest market for Swiss timepieces.

“We expect that higher integration into retail will provide Swatch with faster top line growth, better operating performance and return on invested capital improvement,” Exane BNP Paribas analyst Luca Solca said in a note.

Vontobel’s Rene Weber said sales of Rivoli would now be consolidated but would likely only add 1 percent to sales in 2014 as he estimated Rivoli was currently already doing 60 percent of its sales with Swatch Group brands.

Dubai, helped by a rebound in its property market, is recovering from a debt crisis in 2009 when several of its state entities were forced to restructure debt and seek more time for repayment. But the emirate, facing debt repayments of about $50 billion over the next three years, has been getting serious about selling off assets to raise money.

Reuters had reported in October that the private equity arm of Dubai Holding was in talks to sell the 18 percent stake in Rivoli to Saudi-based Al Rajhi Capital.

Exane’s Solca outlined in a research report that Swatch could increase its stake in Hengdeli Holdings (HKG:3389), the biggest watch retailer in Greater China, thus following the example of Italian premium eyewear maker Luxottica (MIL:LUX), which has turned into a retailer through acquisitions.

Swatch Group already holds a 9 percent stake in Hong Kong-based Hengdeli. The world’s biggest luxury goods group, LVMH (LVMH.PA), also has a 6.4 percent stake in Hengdeli.

Solca said Swatch effectively had a 20.4 percent stake in the group if one took into account the 500 million Hengdeli shares mortgaged in favour of Swatch by Hengdeli Chairman Zhang Yuping to guarantee a personal loan he obtained from the watchmaker in 2011.

Swatch also has a 33 percent stake in Saudi-Arabian retailer Alzouman General Trading Co. Ltd.

It has in recent years been pushing its own retail concepts by opening what it calls Tourbillon stores for its high-end brands, such as Breguet, Blancpain and Omega, and Hour Passion stores for its mid-range labels like Longines and Tissot.

Shares in the watchmaker rose 0.8 percent at 1046 GMT, slightly ahead of the European personal and household goods index (.SXQP).

(This story was corrected to fix detail on Luxottica in paragraph 15)

(Additional reporting by Astrid Wendlandt in Paris; Editing by Patrick Graham and Giles Elgood)

Swatch takes majority stake in Dubai retailer Rivoli

By Silke Koltrowitz

Swatch Group raised its stake in the Dubai retail group to 58 percent, taking over Rivoli’s network of outlets in the fast-growing Middle Eastern market.

ZKB analyst Patrik Schwendimann said he estimated the purchase price for the 18 percent stake at about 100 million Swiss francs ($110 million).

Luxury brands that have bought out their retail partners include Gucci (PAR:PP) Hermes (PAR:RMS) and Prada (HKG:1913) in Russia and Burberry (LSE:BRBY) in China and Japan.

The Middle East has been one of the fastest-growing markets for Swiss timepieces, at least partly making up for a slowdown in demand in China.

WATCH EXPORTS

Swiss watch exports to the United Arab Emirates rose more than 13 percent in the 10 months to October, making it the tenth biggest market for Swiss timepieces.

Reuters had reported in October that the private equity arm of Dubai Holding was in talks to sell the 18 percent stake in Rivoli to Saudi-based Al Rajhi Capital.

Swatch Group already holds a 9 percent stake in Hong Kong-based Hengdeli. The world’s biggest luxury goods group, LVMH (LVMH.PA), also has a 6.4 percent stake in Hengdeli.

Swatch also has a 33 percent stake in Saudi-Arabian retailer Alzouman General Trading Co. Ltd.

Shares in the watchmaker rose 0.8 percent at 1046 GMT, slightly ahead of the European personal and household goods index (.SXQP).

(This story was corrected to fix detail on Luxottica in paragraph 15)

(Additional reporting by Astrid Wendlandt in Paris; Editing by Patrick Graham and Giles Elgood)

Swatch takes majority stake in Dubai retailer Rivoli

Maitres du Temp: The masters of time

INAUGURAL TIMEPIECE: Photo shows Chapter One, the inaugural timepiece from Maitres du Temps. It is the first wristwatch to ever feature a tourbillon with mono-pusher column wheel chronograph, retrograde date, and retrograde GMT, as well as moon phase and day of the week on separate rolling bars.

KUCHING: It comes as no surprise that the world of luxury watches is dominated by players who strive to offer the best not only in performance but also in appearance and appeal.

Maitres du Temp serves exactly to do that here in the country, having opened its first Malaysian boutique in Starhill Gallery, Bukit Bintang about a year ago in conjunction with last year’s instalment of ‘A Journey of Time’, Southeast Asia’s largest luxury watch and jewellery showcase held annually.

Maitres du Temps has its origin in a determination to transform a dream into reality – a dream of bringing together contemporary watchmaking’s greatest creative geniuses in unique collaborations.

“Our goal is to create and develop products that have never been done before. We design shapes for movements which are not orthodox, for example, putting a rectangular movement in a round case,” explained chief executive officer Christophe Viguerie in an interview with The Borneo Post.

“By utilising the rollers as a way to cement the DNA of the brand in an ever changing landscape, we have set ourselves apart.”

Maitres du Temp experienced a breakthrough for its watches when its founder Steven Holtzman – who has always been fascinated by the combination of rolling bars and clocks – saw the possibility of someday being able to incorporate rolling bars into a mechanical timepiece.

This gave birth to Chapter One – the inaugural timepiece from Maitres du Temps.

It is the first wristwatch to ever feature a tourbillon with mono-pusher column wheel chronograph, retrograde date, and retrograde GMT, as well as moon phase and day of the week on separate rolling bars.

“Because of the high level of devotion for the timepiece, the Chapter One collection continues to grow,” Viguerie explained.

“Since the original tonneau-shaped masterpiece, we have seen two variations. Chapter One Round was introduced at Baselworld in 2010 and this year we are extremely excited to introduce the sapphire dial Chapter One Round Transparence.”

With the challenge of creating something that has never been done before and a great deal of attention to research and development, the CEO said there will always be new and exciting advances in watchmaking.

“With Maitres du Temps, each team of watchmakers will work on new developments using their individual expertise and creativity.

“Maitres du Temps is not about an independent watch manufacturer; it’s about collaboration, taking the best ideas from a group of people and putting them into one really special creation. In our case, each Chapter represents a piece of the concept.”

Viguerie went on to highlight that each Chapter is truly blended through a representation of a group of living watchmakers, with different generations work together in coming up with solutions.

“As the Chapters are introduced, we hope to be able to write a few more pages of our own story. That is what Maitres du Temps is,” he added.

This year, the group will officially launch its Chapter One Transparence at A Journey Through Time VII, Kuala Lumpur this month. Seeing as A Journey Through Time is a meeting place for all watch and jewellery aficionados, Viguerie noted that this was the perfect platform to share with the world the creation of Maîtres du Temps.

“I am impressed to see that A Journey Through Time has grown bigger and better every year with the level of luxurious watches and jewellery pieces. This event has evolved into Southeast Asia’s largest and most decadent luxury watch and jewellery showcase which has continued to elevate and reinforce the country’s status as a global destination for high-end shopping,” he opined.

“The showcase is well on its way to be the Baselworld Fair in Asia and I’m pleased to have our boutique in Starhill Gallery,” he concluded.