WHEN French luxury giant Kering wanted to sell its Swiss holding company Sowind early this year, it didn't have to look far for a buyer. There was one right under its nose: Patrick Pruniaux. The man running Sowind, which owns Swiss watchmakers Girard-Perregaux and Ulysse Nardin.
Together with some senior managers of the 2 watch brands - he won't disclose how many - Pruniaux closed a management buyout deal with Kering by the middle of the year. While investors were involved, the new chairman and chief executive of Sowind told The Business Times that the MBO was structured such that the new management owners would have total control "of the (long-term) strategy and of the company".
The financial details of the buyout are kept under wraps, but Kering had said in a statement that it is moving away from the high-end watch brand sector to focus on activities in which it has scale. While the watches division wasn't highlighted in the luxury giant's latest financial report, Kering expressed confidence in the future of Girard-Perregaux and Ulysse Nardin.
Analysts, hailing the sale as a positive move, reportedly said Kering was probably making the most of a recovering watch market to exit a category where it is suffering, given that the group is a relatively small player in the luxury watch space. It shed around a quarter of its watch staff in September 2020 as the pandemic prompted store closures and halted travel.
Demand has since bounced back even as China, the biggest consumer of luxury timepieces, continued to lock down. The US$92.75 billion watch market - based on a 2021 figure according to some calculations - is tipped to grow at a compound annual rate of 5.02 per cent in 2022-2027. The sunny outlook would be reason enough for Pruniaux to buy Ulysse Nardin and Girard-Perregaux, both historic names with a rich heritage.
Pruniaux, however, said he's driven more by the prospect of running a totally free enterprise, especially one with great promise. Under Kering, the senior management had lots of autonomy - and they managed the 2 brands as if they owned them, according to him. With the MBO, they would move to full independence.
"I would be delighted to be an entrepreneur," said the man who once worked for Apple. "I believe in the future of the 2 maisons. I've been leading (them) for 4, 5 years and we've been doing a lot of things and planning a lot not only for a couple of quarters but over several years."
Already, Pruniaux claimed, Girard-Perregaux and Ulysse Nardin are out-performing the market. "We're succeeding because the brands are great," he said. "Obviously the environment could have an influence (but) right now it's the consequence of several actions we've taken in the past that are paying off. I'm convinced we are entering a new phase that's extremely positive."
Kering had made investments into and given much support to the 2 brands, laying a strong foundation for them to carry on. Girard-Perregaux has rediscovered its classic "Bridges" model and expanded the collection in recent years, while the brand's Laureato found new popularity in the market - thanks also to the latest craze for watches with integrated bracelets. Ulysse Nardin, meanwhile, spun off many versions of its disruptive and still widely admired Freak watch. It has also rolled out Blast, a new collection that features timepieces with a larger case and futuristic look. "We're going to reinforce these," Pruniaux said.
The new owners will also be doing much talking, which explains Pruniaux's presence in Singapore and this interview. The talking goes beyond reassuring retailers and customers that things will remain the same and the brands are here to stay. The newly-independent brands also want to keep in touch and engage with all stakeholders constantly.
Pruniaux said customers of luxury goods today are highly-educated and socially-conscious - and they want a say in the creation of what they buy. "That's why we work a lot to explain what we're doing because the more you explain things the more transparent you are." And the more transparent the 2 brands become, the more customers can trust and feel they're part of them. Which, Pruniaux said, is really what many customers seek these days.
There's the story-telling part. "I think consumers today buy into a brand because of the story, because the product itself is sexy," Purniaus said. "It could be the design, the materials, the innovation behind it, the movement. But they're always reassured (if) there's a real history behind the product."
With a heritage that that dates back to 1791 for Girard-Perregaux, and 1846 for Ulysse Nardin, there's plenty of history to share. Girard-Perregaux is one of the oldest watchmakers around that epitomises sports chic, while Ulysse Nardin is clearly a disruptive but innovative manufacturer inspired by the sea.
The new chairman and CEO is determined to protect their legacies and identities - and run them separately, even though he oversees both brands.
"I've 2 different teams, one for Ulysse Nardin, one for Girard-Perregaux," he said "They're completely independent from one another, commercially, (in) marketing, product development, even innovation. The 2 teams almost don't talk to each other."