Watches of Switzerland Group has bought Hodinkee, the companies announced simultaneously this morning to the London Stock Exchange and the media business’s own website.
Hodinkee shut down its retail arm in July this year, and the acquisition appears to be geared more towards Watches of Switzerland getting access to its audience, which is reported at 22.2 million annual unique visitors to its website and over 1 million social media followers.
“Our strategy at WOSG is focused on staying at the forefront of the luxury industry, aligning with brands which inspire us and whose partnership offers a mutually beneficial outcome. The acquisition of Hodinkee directly supports our ecommerce business, driving traffic and brand awareness across our markets, and particularly in the US, further enhancing our sector leadership online,” says Watches of Switzerland Group CEO Brian Duffy.
Hodinkee still sells a limited number of exclusive watches made in collaboration with brands, and these will now be offered via Watches of Switzerland’s ecommerce site.
It also has an insurance product, tailored to the needs of watch collectors, that is also part of the deal.
Ben Clymer, Hodinkee’s founder, returns to lead the business full time in a role he describes as president and primary decision-maker. “Watches of Switzerland is the right partner for me and this business and now is the right time. As of today, there should be no confusion about ownership – we are a part of the Watches of Switzerland Group, fully, proudly, and henceforth,” he says.
“The Watches of Switzerland Group disrupted the watch retail world in the same way Hodinkee worked to create a new category for watch editorial coverage. I am honoured to align Hodinkee with Watches of Switzerland, and I am confident in our shared future,” he adds.
Read Ben Clymer’s letter to Hodinkee readers here.
Financial details of the acquisition have not been disclosed beyond WoSG telling the stock market that it will be funded out of existing financing facilities and will not materially impact the group’s leverage position.
But it seems improbable Hodinkee was valued at anything like the $100 million it was reportedly worth after securing $40 million in a funding round backed by Silicon Valley venture capitalists, LVMH’s incubator business, Superbowl champion quarterback Tom Brady and a Grammy-winning singer John Mayer.
WoSG’s share price was virtually unmoved in early trading this morning.
Hodinkee’s challenges have been well-documented over recent months as it shut down its retail business in order to concentrate on its original mission as an independent commentator and advocate for watchmakers and watch lovers.
In July, Mr Clymer addressed speculation about financial difficulties causing multiple rounds of redundancies and the closure of its retail business as an authorised dealer for more than 30 watch brands and the owner of the troublesome pre-owned Crown & Caliber operation.
Hodinkee retail play
The move into retail was never plain sailing and there were were early setbacks.
First, it might have been hoped that the brand list would improve, but online-only retailers find it impossible to work with the biggest and hottest brands: Rolex, Audemars Piguet, Richard Mille and Patek Philippe, because they only sell through their brick and mortar ADs.
Omega briefly flirted with Hodinkee, and the companies even opened a pop-up physical store together in New York in 2019, but the partnership did not last. Early backers including Tudor and even Apple also walked away.
Two months after the $40 million funding round in 2020, the company announced it had bought Crown & Caliber, one of the biggest second hand luxury watch traders at the time, for an undisclosed sum.
That looked like a sound investment as prices for luxury watches soared on the secondary market. Pre-owned specialists cashed in as a Rolex bought at any time between 2020 and 2022 could be turned for an instant profit.
But those days were not normal, and when prices peaked and began to fall sharply after the spring of 2022, stock-holding traders like Hodinkee / Crown & Caliber were suddenly hit with the double whammy of a virtual freeze in sales coupled with the value of their inventory plummeting.
Indexes tracking the most traded watches show prices from the peak in 2022 to today falling by well over 40%, and still nudging lower even today.
Meanwhile, the broader market for luxury goods, including watches, has cooled following a post-pandemic boom. Authorised dealers for the likes of Rolex and Patek Philippe have been largely immune to the downturn, but demand for less desirable brands has withered this year, as financial results from the likes of LVMH, Swatch Group and Richemont have shown.
Retail sales for luxury watches in the United States were down by 8.6%, year on year, in July and 6.1% lower in August, according to the Luxury Watch Barometer (based on over 2,100 luxury watch stores reporting point of sale data. For additional information go to www.luxurywatchdata.com).