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CORDER’S COLUMN: Breitling may already be a $1 billion business

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Rob Corder.

As a privately-owned business, Breitling is under no obligation to publish annual accounts, so we rely on estimates by the likes of Morgan Stanley an Vontobel, with their annual state of the Swiss watch industry reports, and from other snippets of information.

One of the must useful sources is called Companies House, in the United Kingdom, where every company registered to trade in the country, including subsidiaries of global operations, is required by law to file annual accounts that are accessible by the public.

Breitling UK Ltd, the legal entity that runs two showrooms in London while handling distribution to retailers throughout the UK and Ireland, just published its accounts for the year ending March 2022, and they show a spectacular rise in turnover to £72 million, up 67% on the prior year.

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Breitling UK not only increased its sales by two-thirds in relation to the covid-ravaged 2020-21 financial year, it was also 50% up on its best pre-pandemic year.

We already know, at least anecdotally from conversations with retailers, that the US market grew even faster.

I also keep hearing tales from Breitling’s authorized dealers that they can barely believe how strong demand for the brand has become.

The roll out of monobrand stores in the loft apartment style, has been particularly successful.

Top line growth appears to be the mission right now for Breitling, and the business’s private equity investors appear content to sacrifice higher profit margins in pursuit of this expansion.

In the UK, for example, operating profit margins have been at around 2% since 2014, and only rose to 4% in the 2020-21 financial year, despite the 67% rise in top line sales.

For a bit of fun, let’s try to work out Breitling’s turnover in the United States and world-wide, using a combination of the UK Companies House data (hard facts), Swiss watch export data (also hard facts) and Morgan Stanley’s 2021 report (a little more speculative on the numbers).

The most recent Morgan Stanley report we have, for the 2021 calendar year, estimates Breitling’s turnover at CHF 680 million.

According to the Federation of Swiss Watch Industry, the UK accounts for 6.6% of worldwide exports, the USA in 2022 represented 15.7%.

If Breitling’s sales in the UK and USA are in proportion to their share of Swiss watch exports, then £72 million turnover in the UK would translate to £171 million ($207 million at today’s exchange rate).

Remember, the UK turnover figure is predominately from wholesale, although Breitling does own and run two boutiques in central London, which contribute to the total. The retail sales total for Breitling will be around double the wholesale figure.

We can also take a punt at Breitling’s global turnover, based on the same triangulation of data. If the UK’s £72 million represents 6.6% of worldwide sales, then the total would be £1.09 billion, equivalent to $1.3 billion (CHF 1.2bn).

Another way to estimate Breitling’s 2022 turnover, would be to multiply Morgan Stantley’s 2021 estimate of CHF 680 million by the UK’s growth rate of 67%. This gives us CHF 1.1 billion ($1.2 billion).

So, there you have it, by my back of an envelope calculation, Breitling will be declared a $1 billion business when Morgan Stanley’s report on 2022 comes out.

You heard it here first.

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