Watchfinder.co.uk Ltd sold pre-owned watches worth £109.2 million ($138m)in its final financial year as a privately owned business, a rise of 26%.
Operating profit for the company also grew strongly by 37% to £7.6 million accounts filed in the UK for the year ended March 31, 2018, show.
Watchfinder was virtually unknown in the United States until Richemont bought the company in June last year for an undisclosed sum. Since the acquisition, the company’s directors have declined interviews with WatchPro, although a director did say informally that the plan was to “go global”.
The company had previously stated that America was a key target market for the business, where it will face competition from the likes of Watchbox and Bob’s Watches, which also buy, restore, authenticate and re-sell pre-owned luxury watches.
The price paid by Richemont has not been disclosed, but a figure of £250 million ($315m) is widely shared within the industry.
If true, that valuation would be a massive 41x multiple of retained profit in 2018 of £6 million ($7.5m).
Growth will have been a key factor in the valuation, and the graph over the past seven years demonstrates the attractiveness of Watchfinder. The company had turnover of only £13 million and operating profit of just £270,000 seven years ago and stock worth a mere £1.3 million.
Fast-forward to 2018 and sales are up 725%, operating profit has risen by more than 2700% and the value of stock has soared by 2200% to £29 million today. Watchfinder values its stock at its retail value.
“The directors are extremely pleased with the performance,” says Watchfinder director and chief information officer Jonathan Gill in a statement accompanying the 2018 accounts.
“We have maintained our position as the market leader for pre-owned luxury watches sales in the UK,” he adds.
In June last year Johann Rupert, chairman of Richemont announced the acquisition of Watchfinder and praised its performance. “Sixteen years ago, Watchfinder’s founders foresaw the need for an online marketplace for premium pre-owned timepieces. Watch enthusiasts themselves, they established Watchfinder to provide excellence in customer experience. We believe there are substantial opportunities to help grow the Company further. Today, Watchfinder operates both as an ‘online’ and ‘offline’ business in a complementary, growing, and still relatively unstructured segment of the industry,” he said.
Watchfinder owns and operates several brick and mortar stores in the UK, but none outside its home country.
The acquisition was timely, particularly as Richemont’s core business for new watch and jewellery sales recorded sluggish growth in 2018 as a slowdown in China started to bite.
Global sales for Richemont rose by 21% to €6.8 billion for the six months ended September 30.
Yoox Net-A-Porter and Watchfinder, which had been included as wholly owned for the first time by the luxury conglomerate for the reporting period, contributed €959 million to coffers.
Without the contribution from the new division that Richemont calls Online Distributors, sales would still have risen by 8% at constant exchange rates (6% actual).