Movado Group Buys Ebel

The Movado Group has agreed to buy Ebel, a top Swiss luxury watch brand, from French luxury goods group LVMH (Moët Hennessy Louis Vuitton). The $47.3 million all-cash deal, announced Dec. 22, will close in the first quarter of 2004.

The 93-year-old Ebel business—known internationally for its distinctive, innovative lines including Beluga, Classic Wave, and 1911—did $65 million in net sales in 2003. It will remain in La Chaux-des-Fonds, Switzerland.

“We’ve always thought Ebel is a great brand, with great image, distribution, products, and history, and have been interested for years in acquiring it,” said Ephraim Grinberg, Movado Group president and chief executive officer, in a January 2004 interview with JCK. Its addition provides “a compelling strategic opportunity” for the Movado Group to expand in both the luxury watch and global markets, he said.

The Movado Group, based in Lyndhurst, N.J., is Ebel’s third owner in a decade. However, noted Grinberg, Movado is “the first watch company [to own Ebel]. That’s to Ebel’s benefit. We understand the watch business and will nurture it with tender loving care.”

Plans. While it is too soon to discuss specific plans for Ebel here or globally, Grinberg did say the position of worldwide managing director for Ebel (a position which has been vacant for months) will be filled this year, and that Ebel’s previously announced goals for North America—going from 384 outlets to more than 450 in a few years, marketing actively to men under 35 and to young Hispanics—will be pursued.

“When we look at the U.S. market, we think the [Ebel USA] management team has done a great job,” he says, “and there are opportunities to continue growing. We intend to provide resources to build upon its heritage and maximize its potential, while generating long-term value for our shareholders.” Rick Cote, the group’s executive vice president and chief operating officer, said the group will “leverage our strong infrastructure to enhance Ebel’s presence in the United States.”

According to Grinberg, “We’ll continue to focus on, evolve, and develop product that’s purely ‘Ebel’—some based on its archives and heritage—and will focus powerful advertising on the brand.” Last year, Ebel added a new line called Tarawa.

Ebel—the Movado Group’s first acquisition since 1983—is “an excellent complement” to the group’s portfolio, Grinberg said. (The portfolio currently includes Movado, Concord, and the licensed lines ESQ, Coach, and Tommy Hilfiger, which sell worldwide and cover popular, moderate, and luxury price brackets.) The addition of Ebel to that list will “significantly expand our presence in the high end of the luxury watch category.” Ebel watches retail mainly for $1,500 to $10,000, with some in the $100,000 bracket. It will become the group’s most expensive brand, topping Concord, which retails for $1,000 to $9,999.

Going global. Just as important is the fact that Ebel, which does 70% of its business outside North America, provides “a solid platform” to boost Movado Group’s global presence, especially in Germany, the United Kingdom, France, and Japan. The acquisition has already increased Movado’s percentage of international sales from the low double digits to about 20%.

Ebel’s integration will cut group earnings in fiscal 2005 (ending Jan. 31) 10 to 20 cents a share, says the company, but will begin helping earnings by fiscal 2006.

Founded in 1911, Ebel came to the U.S. market in 1979. In 1994, it was bought by Investcorp, a Bahrain investment firm, which sold it in 1999 to LVMH, whose upscale watches include TAG Heuer, Christian Dior, Zenith, and Fred Joailler. Between 2000 and 2003, Ebel revamped its operations and marketing, streamlined worldwide distribution to about 1,800 outlets, and upgraded its brands. In 2002, it launched its high-end haute joaillerie watches. Last year, Ebel unveiled Tarawa, new looks for Beluga and 1911, a new ad campaign, and new in-store displays and packaging. The company also began pursuing younger affluent adults, more men, and Latinos in the U.S. market. (Ebel’s traditional customers are aged 30 to 45, 70% women and 30% men.)

Movado Group Inc., a publicly owned firm, designs, manufactures, and distributes Movado, Concord, ESQ, Coach, and Tommy Hilfiger watches. Its approximately 10,000 trade customers include department stores, jewelry store chains, and independent jewelers. It also runs several Movado stores, which, in addition to watches and clocks, carry exclusively designed jewelry, tabletop accessories, home decorative items, and eyewear.