The designer, marketer and distributor of watches under its own Movado, Concord and Ebel brands, plus six licensed brands, will now be selling Olivia Burton watches.
On Wednesday, July 5, Movado announced its €60 million (about $680 million) all-cash acquisition of JLB Brands Ltd., the maker of Olivia Burton women's watches, and one of the U.K.'s fastest-growing watch and jewelry brands.
JLB, founded by Lesa Bennett and Jemma Fennings, began selling watches under the Olivia Burton brand in the U.K. in 2012 through retailers including John Lewis, Watchshop and Argento. Last year, London-based JLB expanded Olivia Burton to the U.S. by selling through department and specialty retail stores including Urban Outfitters Inc.'s (URBN - Get Report) Anthropologie and Nordstrom Inc. (JWN - Get Report) .
As of January, the company said its Olivia Burton watches were present in 117 stores in the U.S. The company has also been selling jewelry in the U.K. since sometime last year. In its latest fiscal year ended March 31, JLB said its revenues increased 64% to €15 million and it expects to generate €25 million this year.
Movado said that the acquisition was funded with cash on hand from Movado's non-U.S. subsidiaries and was completed on July 3, subject to working capital and other closing adjustments.
According to a company statement, Bennett and Fennings will remain in leadership roles at Olivia Burton, reporting to Efraim Grinberg, chairman and CEO of Movado.
Shares of Movado rose 5.63% to $26.25 in today's trading.
TheStreet talked with Grinberg by phone to discuss the acquisition.
Question: What is the state of the watch market right now?
A: We think, like a lot of retail categories, it has been challenged but I think particularly, just by the retail environment overall. E-commerce is growing very, very quickly, so the watch category is as well but not enough for the retailers to make up for the overall decline in traffic. We've been courting these two young entrepreneurs for about a year, so ultimately we were really excited to be able to put this together. And I think it shows you that when you have creativity, innovation and something special, consumers flock to it despite whatever the environment is telling you.
A: This will be the fourth brand that we own. And then we have six licensed brands, so I think we have a pretty nice portfolio. I wouldn't say that we want to build or add anymore brands, I think right now we just saw something that was really interesting for us, really exciting.
Q: In making this acquisition, did you think about Olivia Burton's concentration in the U.K. and its early, rapid success as motivation to help declining U.S. watch sales?
A: Olivia Burton has grown extremely quickly by selling really cool-looking watches to women across generations. These are young women in their early 30s who built this tremendous brand in the U.K. I think the fact is that they had a successful launch in the U.S. Within this challenging environment, I think we can help support that to an even-greater extent.
Q: How do you think having young, millennial leadership at Olivia Burton has helped it grow?
A: I think that it being run by two millennial women is exciting. The interesting thing about this brand is, when I visited Olivia Burton's Topshop flagship location in London, I saw a mother, grandmother and a young girl in her 20s shopping for a watch and that tells you that it is a multi-generational brand even though it was designed by these two young women.
Q: How are you looking to grow Olivia Burton in the U.S. and how does it compliment your other brands?
A: I think there's a big e-commerce opportunity with partners like Nordstrom and with oliviaburton.com and I think there ultimately will be a retail opportunity, as well, for Olivia Burton.
It is our first owned fashion watch brand. It's a women's-only brand, compliments our own brands [in that] it has this luxury and aspirational image but has an affordable price point for consumers.
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