Luxury goods conglomerate Kering has announced its plans to sell its watches division, which includes esteemed brands Girard-Perregaux and Ulysse Nardin, to its current management. This strategic decision enables Kering to concentrate on its core activities and prioritize labels with the potential to become valuable assets within the group.

The timing of this move is significant, as the high-end watches industry shows signs of recovering from the impact of the COVID-19 pandemic. Luxury group Richemont recently reported a 32% increase in sales during the third quarter of 2021, indicating a positive trend in the market.

Industry analysts view Kering’s decision to sell its watches division as a wise move. Luca Solca, an analyst with Bernstein, believes that Kering is leveraging the recovering watch market to exit a category where it had been facing challenges due to its smaller position compared to competitors. Solca describes this move as a positive development for Kering.

In recent years, Kering had been putting efforts into strengthening its watches business by optimizing distribution channels and revamping product lines. However, intense competition among leading players has intensified, with the most successful brands gaining even more prominence.

The sale of the watches division could also draw attention to Kering’s potential for future mergers and acquisitions. Speculation about a possible partnership between Richemont and Kering has been circulating, particularly after LVMH’s acquisition of U.S. jeweler Tiffany, which increased the pressure on competitors to scale up. Despite Kering’s ambition to grow both organically and through acquisitions, it seems that watches will not be a focal point for future expansion.

Overall, Kering’s decision to divest its watches division aligns with its strategy of prioritizing labels with significant growth potential within the group. This move allows Kering to streamline its operations and capitalize on the recovery of the luxury market. It will be intriguing to observe how Kering’s future mergers and acquisitions unfold, as well as which sectors will take center stage in its expansion efforts.

For further reading on the luxury watches market, check out these useful links:
1. Business of Fashion: The New Strategy for Luxury Watch Brands
2. Reuters: With a Taste for Boost, Wealthy Chinese Rev up Sales of Swiss Watches