REG - Watches of Switzlnd. - Acquisition of Roberto Coin Inc.

Watches of SwitzerlandAnnouncement

09/05/2024 07:00

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RNS Number : 6947N  Watches of Switzerland Group PLC  09 May 2024

9 May 2024

FOR IMMEDIATE RELEASE

 

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

 

The Watches of Switzerland Group PLC

Acquisition of Roberto Coin Inc. for a total consideration of $130 million

 

Transaction represents significant milestone in the Watches of Switzerland
Group's luxury branded jewellery strategy

 

On 8 May 2024, the Watches of Switzerland Group ('WOSG' or the 'Group') signed
and completed the acquisition of the entire share capital of Roberto Coin
Inc., an associate company of Roberto Coin S.p.A. from Roberto Coin S.p.A.,
Pilar Coin and Peter Webster, Co-Founder and President of Roberto Coin Inc.,
for a total consideration of $130 million (the 'Acquisition').

 

 

Background on Roberto Coin and Roberto Coin Inc.

 

·      Roberto Coin S.p.A., founded in the Italian city of Vicenza,
designs and manufactures delicately handcrafted jewellery with a unique ruby
signature under the world-renowned Roberto Coin brand

·      Roberto Coin is the sixth largest jewellery brand in the US by
sales at retail value(1)

·      Roberto Coin Inc. has exclusive perpetual rights to import and
distribute Roberto Coin jewellery throughout the US, Canada, Caribbean and
Central America

·      The US precious jewellery market is by far the world's largest
jewellery market, and the Roberto Coin brand has developed a strong position
in it, competing successfully with other top 10 industry leading brands such
as Cartier, Tiffany, Van Cleef & Arpels, Bvlgari and David Yurman(1)

·      Roberto Coin Inc. sells to major department stores, jewellery
chains, and independent jewellers in more than 400 points of sale

·      The Acquisition builds on the Group's successful partnership with
Roberto Coin, which spans over a decade; Roberto Coin is currently available
in 16 WOSG showrooms in the US

 

 

Strategic rationale

 

·      Luxury branded jewellery is a core pillar of the Group's growth
strategy; 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(2)

·      The Acquisition builds on the Group's proven capabilities in
showcasing luxury brands across both watches and jewellery and will
significantly enhance our strategic positioning in the luxury branded
jewellery category in the US, the world's largest luxury jewellery market on a
per capita basis(3)

·      The Group will leverage its operational and retailing expertise
to drive incremental growth in the Roberto Coin Inc. business, both across
Robert Coin Inc.'s wholesale distribution and well as direct to consumer
('DTC') in the Group's retail boutiques and online:

·      Expansion opportunities in wholesale

o  Grow the wholesale business under the leadership of Peter Webster, who
will remain President of Roberto Coin Inc., reporting to David Hurley,
President North America and Deputy CEO of the Watches of Switzerland Group

o  Expand the wholesale network with independent retailers

o  Develop joint business plans with wholesale partners

o  Grow the export market outside of the US

·      DTC through the Group's showroom portfolio and online

o  Vertical margin gains through securing product direct from Roberto Coin
S.p.A.

o  Increasing the number of points-of-sale within the showroom portfolio

o  Using the Group's CRM and clienteling capabilities to drive sales

o  Growing the high-end Roberto Coin Collection

·      Opportunities for both DTC and wholesale

o  Elevating the showroom presentation of the brand through the development
of market leading shop-in-shop display formats

o  Opening mono-brand boutiques and franchise stores

o  Investing in brand marketing, including digital, to drive brand awareness

o  Developing the online proposition

 

 

Value enhancing financial effects

 

The Acquisition completed for a total cash consideration of $130 million (of
which $10 million is deferred for one year and contingent on the future
profitability of the acquired business), subject to working capital
adjustments.

 

Roberto Coin Inc. achieved annual revenue of $146.2 million and profit before
taxation of $30.1 million for the audited financial year ended 31 December
2022. Gross assets at that date were $87.9 million. 2023 preliminary and
unaudited revenue was $138.7 million and profit before taxation $30.2
million.

 

The Acquisition was financed via a new $115 million term loan facility.  At
the date of the Acquisition, the transaction increased the Group's leverage to
c.0.8x Net Debt(4)/Adjusted EBITDA(5) (pre-IFRS 16 at mid-point of FY24
guidance).  Covenants are identical to the Group's existing multicurrency
revolving loan facility.

 

The Acquisition will be margin enhancing and EPS accretive from the date of
acquisition.

 

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.

 

Roberto Coin Inc. will continue to operate as an independent, standalone
company within the Watches of Switzerland Group.  The Coin family will retain
a seat on the Board of Directors of Roberto Coin Inc. and Peter Webster will
remain as President of Roberto Coin Inc., supported by the exceptional,
experienced and dedicated team he has built over nearly 30 years.

 

Brian Duffy, Chief Executive Officer of the Watches of Switzerland Group,
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.

"We believe there is significant opportunity to leverage our proven retail
expertise in luxury branded jewellery. 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.  We are committed to our new wholesale partners and excited to work
with them and help them grow with Roberto Coin.

"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.

"It has been a great pleasure getting to know Roberto and Peter over the last
18 months while we have been discussing this exciting opportunity. We are
enormously appreciative of the trust Roberto, his family and Peter Webster
have placed in us for this important next stage of the brand's development.
We are delighted to welcome Roberto Coin Inc. colleagues into the Group and
look forward to working closely with Roberto and Peter going forwards."

 

Roberto Coin, Founder and CEO of Roberto Coin, said:

"Today's announcement marks a significant step change in the development of
Roberto Coin Inc.

 

"Roberto Coin is synonymous with design creativity, diversity, innovation and
imagination. We are delighted to have partnered with the Watches of
Switzerland Group, who have a real understanding and appreciation of our
unique, world-class brand and products, and can accelerate our retail strategy
in North and Central America.

 

"We look forward to benefitting from their wealth of luxury retail and digital
experience to unleash the growth potential of the Roberto Coin brand across
our chosen markets."

 

 

Conference call

A conference call and presentation for analysts and investors will be held at
10.30am (UK time) today. To participate in the conference call, register using
the link or dial in details below:

 

Registration
Link: https://www.netroadshow.com/events/login?show=429f4187&confId=64861
(https://gbr01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.netroadshow.com%2Fevents%2Flogin%3Fshow%3D429f4187%26confId%3D64861&data=05%7C02%7Cc.browne%40thewosgroup.com%7Cebc4d11d80094b5c560108dc68302c48%7C865fd163942a47f0ae7aa481aca11e10%7C0%7C0%7C638499803333350595%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=kP80E7xlgmiM3ccVgCZcqs7rIRXNEUjzFJFvCRzLdNA%3D&reserved=0)

Dial in: +44 20 3936 2999

Conference access code: 179311

 

 

Notes:

(1)Source: WOSG research

(2)Source: McKinsey, Euromonitor

(3)Source: Euromonitor, WOSG research

(4)Net Debt is defined as total borrowings (excluding capitalised transaction
costs) less cash and cash equivalents and excludes IFRS 16 lease liabilities

(5)Adjusted EBITDA is defined as operating profit before exceptional items and
IFRS 16 impact

 

This announcement contains information which is deemed by the Company to
constitute inside information stipulated under the Market Abuse Regulation
(EU) No.596/2014 as it forms part of UK law by virtue of the European Union
(Withdrawal) Act 2018. Upon the publication of this announcement via the
Regulatory Information Service, the inside information is now considered to be
in the public domain.

 

The person responsible for arranging the release of this information on behalf
of the Company is Laura Battley, Company Secretary and General Counsel.

 

 

Contacts

The Watches of Switzerland Group

Anders Romberg, CFO
 
              +44 (0) 207 317 4600

Caroline Browne, Group Finance & Investor Relations Director
                                      +44 (0) 1162 817 420

investor.relations@thewosgroup.com (mailto:investor.relations@thewosgroup.com)

Headland

Lucy Legh / Rob Walker / Joanna
Clark
                                +44 (0) 20 3805
4822

wos@headlandconsultancy.com (mailto:wos@headlandconsultancy.com)

 

The Group plans to announce Q4 FY24 results on 16 May 2024.

 

About the Watches of Switzerland Group

The Watches of Switzerland Group is the UK's largest luxury watch retailer,
operating in the UK, US and Europe comprising six prestigious brands; Watches
of Switzerland (UK and US), Mappin & Webb (UK), Goldsmiths (UK), Mayors
(US), Betteridge (US), and Analog:Shift (US), with a complementary jewellery
offering.

 

As at 28 January 2024, the Watches of Switzerland Group had 222 showrooms
across the UK, US and Europe including 98 dedicated mono-brand boutiques in
partnership with Rolex, OMEGA, TAG Heuer, Breitling, TUDOR, Audemars Piguet,
Grand Seiko, BVLGARI and FOPE and has a leading presence in Heathrow Airport
with representation in Terminals 2, 3, 4 and 5 as well as seven retail
websites.

 

The Watches of Switzerland Group is proud to be the UK's largest retailer for
Rolex, OMEGA, Cartier, TAG Heuer and Breitling watches.

www.thewosgroupplc.com (http://www.thewosgroupplc.com)

 

 

About Roberto Coin

Roberto Coin is a brand of fine jewellery whose operational and production
headquarters are located in Vicenza, the jewellery capital of Italy. The brand
has become famous throughout the world for its collections' design and
technological innovation, which pay homage to, and revolutionise ancient
Italian manufacturing techniques, as well as for its particular "art of
creating new authenticity".

 

Roberto Coin, the brand's founder, designer and eclectic businessman, defines
his desire to make collections that are always distinct and to guarantee that
each piece of jewellery is perceived as unique.  Far from standardised, the
brand avoids aesthetic traits that would make it easily recognisable.

 

Roberto Coin prefers that the details of artisanship tell the story of his
mission to create beauty - mixing the past with the present and the codes of
elegance with the forms of art and architecture that inspire him, particularly
as he's walking through the alleyways of Venice, the city where he was born.

 

Another fundamental element that ties the collections together and has made
the brand an icon of refinement throughout the world is a small signature ruby
found inside every piece.  It's positioned so that it's in contact with the
wearer's skin, respecting the ancient legend that rubies could confer a long
and happy life. This precious signature has always been the message that the
brand dedicates to each of its clients. Loved by movie and fashion stars,
Roberto Coin's jewellery takes centre stage on international red carpets and
countless editorial pages. In part, this is a result of the brand's tireless
ethical commitment, a beacon that has illuminated Roberto Coin since its
foundation; a commitment that includes the activities of the Kimberley
Process, World Diamond Council, Dodd Frank Act, RJC, CIBJO and carbon
offsetting.

 

Today Roberto Coin is universally recognised as a pioneering talent in
conceiving new trends and as a man capable of balancing creativity and
commerce in the name of a success that is as brilliant as it is responsible.

 

His creations have conquered more than 60 countries around the world, the
United States being the largest market, where the brand is a leader in the
jewellery industry along with the most important brands.

 

 

Disclaimer

This announcement has been prepared by Watches of Switzerland Group PLC (the
'Company'). It includes statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "anticipates", "expects", "intends", "plans", "goal",
"target", "aim", "may", "will", "would", "could" or "should" or, in each case,
their negative or other variations or comparable terminology. They appear in a
number of places throughout this announcement and the information incorporated
by reference into this announcement and may include statements regarding the
intentions, beliefs or current expectations of the Company Directors or the
Group concerning, amongst other things: (i) future capital expenditures,
expenses, revenues, earnings, synergies, economic performance, indebtedness,
financial condition, dividend policy and future prospects; (ii) business and
management strategies, the expansion and growth of the Group's business
operations; and (iii) the effects of government regulation and industry
changes on the business of the Company or the Group.

 

By their nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that may or may not
occur in the future and may be beyond the Company's ability to control or
predict. Forward-looking statements are not guarantees of future performance.
The Group's actual results of operations, financial condition, liquidity, and
the development of the industry in which it operates may differ materially
from the impression created by the forward-looking statements contained in
this announcement and/or the information incorporated by reference into this
presentation.

 

Any forward-looking statements made by or on behalf of the Company or the
Group speak only as of the date they are made and are based upon the knowledge
and information available to the Directors on the date of this announcement,
and are subject to risks relating to future events, other risks, uncertainties
and assumptions relating to the Company's operations and growth strategy, and
a number of factors that could cause actual results and developments to differ
materially from those expressed or implied by the forward-looking statements.
Undue reliance should not be placed on any forward-looking statements.

 

Before making any investment decision in relation to the Company you should
specifically consider the factors identified in this document, in addition to
the risk factors that may affect the Company or the Group's operations as
detailed above.

 

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