"Polarization increased further in 2020, with the largest brands (generally)
continuing to outperform. One specific development of the Swiss watch sector
(vs. other sub segments of Luxury) is that private players significantly
outperformed listed ones, with Rolex, Patek Philippe, Audemars Piguet, Richard
Mille, as well as Breitling gaining further share last year, we estimate."
good summary here:
https://watchesbysjx.com/2021/03/morgan ... -2021.html
here's what Morgan Stanley & Luxeconsult have to say about Breitling's performance:
"Breitling's turnaround gathering momentum. While Breitling is only ranked number 11 by turnover amongst the Swiss watch brands, we say a quick word here on the brand's performance in 2020 because we think its turnaround illustrates that, while the industry is polarizing, mid size brands can certainly improve their fortunes, even if they are in the mid to upper mid price segment (we estimate Breitling's average retail price at CHF 5,200).
Breitling was acquired by CVC in 2017 and a new management team led by highly regarded George Kern was immediately put in place (George Kern was previously head of Richemont's Specialist Watchmaker division and IWC CEO, which had performed very well under his tenure). In calendar 2020, we believe that Breitling's sales contracted by only about -13% to CHF 440m. This compares to Swiss watch exports declining by -21% in 2020. While it is true that top line was boosted by progress made on vertical integration downstream (we estimate that the share of DTC might have increase from ~20% in 2019 to ~25% in 2020), one could also argue that its sales were disproportionately penalized by its higher than industry average exposure to Europe (very impacted by lockdowns) and lower than industry average exposure to Asia/China (a clear white spot as we discuss later).
We think that Breitling's strong relative performance is down to a number of key initiatives:
1) New launches. Today, we think that novelties account for around 30% (higher than industry average). For example, the re-launch of the Chonomat and the launch Endurance in 2020 were very successful, we think.
2) Increased focus on the Lady segment. In 2020, Breitling launched the Navitimer 35 and the Chonomat lady. With an estimated 25% to 30% of sales done in that segment today (below industry average), we think there is further room to grow;
3) China. While it is estimated that Chinese nationals account for over 40% of total Swiss watch sales, we think the figure is closer to 20% at Breitling. Hence, we find it very encouraging that the brand is able to improve its fortunes despite having limited exposure to the industry's growth engine (so far). While the brand was almost non-existent in Mainland China from a distribution standpoint three years ago, we think it is making good progress there.
4) Brand positioning and values. For example, Breitling just introduced the watch box entirely made of recycled PET; 5) Digitalization. We believe that Breitling shifted its marketing spend to digital and introduced a lot of digital tools and processes. For example, in 2020, Breitling introduced an eWarranty card with block chain technology, allowing clients to follow their watch through its entire life cycle."
) Breitling are doing good things these days.