Word reached the North Shore offices of Henki Time that speculation was no longer necessary. Richemont has pulled the trigger and an agreement has been reached with the Damiani Group for them to take control of Baume & Mercier, and off of the Richemont books.
Without going too much into the heroes and zeros, I'd like to really address a bigger issue that a few other outlets have hinted at, but nobody has really been willing to address - the lack of understanding of identity that many brands suffer from. And those brands in particular? They tend to reside in larger (and sometimes smaller) groups.
Now if we stick strictly with Baume & Mercier, in truth? It's a brand that with even just a little bit more attention from the Richemont leadership, and a bit more understanding about where they lived within Watch Town writ large? Well they could have made a LOT more money and not be an asset needing to be sold. But a big part of that has to do with what I constantly share with the brands I consult for - you must know who you are, you must be comfortable in your own skin, and you MUST PUNCH YOUR WEIGHT.
Let's look at some other examples. I realize all of the other pundits are talking about Zenith. But in truth that is a bit to obvious. We'll come back to it. Let's talk about my old frenimy - Mido. Mido is a brand that can't seem to decide who they are. Are they retro - with the heritage Commanders and Ocean Stars. But then again - countless numbers of SKUs. And here in the US, opening and closing US offices, and going back and forth with concepts. In truth? The majority of what Mido cranks out could really have any brand's name on it. There is very little to distinguish it. Now, in fairness, I have to assume that from their shared administration offices in Le Locle that they make enough money that for better or worse, Hayek the Younger, and Hayek the Even Younger are willing to swing along.
Staying with the Swatch group, let's consider a brand that has an identity that gives it some flexibility, but also has the ability to know itself - Longines. Longines is, if we're honest, what Baume & Mercier should have always focused on being. A step or two above Tissot, but absolutely priced in real world economics. In the real world, a $1,000 - $2,000 watch purchase is going to be a once in a lifetime purchase for most people. And if I'm being honest? That is really what attracted me to watches in the first place. It wasn't about the brand, or how many I could / would get to have. It was about a nice thing that was with you every day. Something that was truly fine, that you had always wanted.
But I digress...
Let's go back to Le Locle - and Zenith. Zenith is a brand that I admire a great deal, and a brand that seems to be cursed to poor stewardship. It has been traded somewhat like a baseball card that each person who acquires it hopes will somehow pivot and make them millionaires. The reality is not nearly so rosy.
Zenith has had the misfortune to land in the hands of a succession of wannabe operators who it turns out were just marking time until the next warm body came along. And with the stewardship of Arnault, Arnault the Younger, and Arnault the Even Younger nothing seems likely to change the trajectory of Zenith. The piece none of us pundits really know is whether or not Zenith is profitable, breaking even, or losing money. My sense is that Zenith has become a sunk cost trap for LVMH. And as with so many people who are successful with many things, it is hard to see, acknowledge, and accept failure when it finally rears it's not-so-attractive head. And Zenith and LVMH's inability to effectively address it is Watch Town's Dunning Kruger Effect writ large.
Now unlike the Watch Bros who apparently know more than anyone else, I am not going to presume that I would know how to fix Zenith. To quote that great movie about the watch business - The Sound of Music: "How do you solve a problem like Zenith?"
So what have we learned from all this? Sadly - probably not a damned thing ; )
Watch Town has a painfully short memory. We forget that once upon a time, apart from a handful of successes, the watch business was a grind. The idea of a Rockstar Watch Maker or CEO was ludicrous. We forget that watch making in Switzerland started out as a way for farmers to make money during the winter when they couldn't farm. And I am a bit of a traditionalist, but perhaps a bit of humility coupled with fiscal responsibility wouldn't be too far misplaced?
Richemont's sale of Baume & Mercier is perhaps the wisest decision they have made for some time. Selling a brand to another suitor who will hopefully take it further than you did is not really a failure, it shows the sort of wisdom that is in short supply in Watch Town. But maybe this will be the first shift towards common sense that will hopefully start a trend which will help some of these red-headed step-child brands not only survive, but one day thrive.
But as with anything in Watch Town, we will wait, and we will see.
