Watches of Switzerland Group Plc is buying Hodinkee Inc., a US watch enthusiast site backed by LVMH and Tom Brady that racked up losses after an ill-timed foray into selling used models online.
The British company, a top seller of Rolex watches in the country and a major retailer in the US, will capture greater market share, particularly online in the US, following the deal, Watches of Switzerland chief executive officer Brian Duffy said in an interview. Financial terms were not disclosed.
The sale marks an end to New York-based Hodinkeeâs troubled entry into online used watch sales. Founded in 2008, the company produces content on watches that has helped fuel an increase in consumer interest in mechanical and premium timepieces, especially in the US, which overtook China as the biggest export market for Swiss watches in 2021.
Hodinkee also sells watch and jewellery insurance and its website attracts 22.2 million annual unique visitors and has more than 1 million social media followers, the companies said Friday.
âWeâve now got the best watch editorial resource in the US market, if not the world,â Duffy said. He declined to divulge how much Watches of Switzerland is paying for Hodinkee, but said the retailer wonât assume any debt as part of the deal.
Watches of Switzerland shares rose as much as 5.4 percent in London trading Friday, but are still down by nearly a third this year.
Hodinkee raised about $40 million in 2020 from investors including retired football star Brady, musician John Mayer, and Bernard Arnaultâs LVMH Luxury Ventures. Other investors have included The Chernin Group LLC and True Venture Management LLC.
In 2021, Hodinkee made a big move into selling used watches by purchasing US online seller Crown & Caliber during a surge in prices for used luxury watches. The deal lifted annual revenue above $100 million.
The online retail business, however, proved to be a loss-maker. After used watch prices began falling sharply in April 2022, Hodinkee moved to restructure operations and cut jobs.
Hodinkee founder Benjamin Clymer, a former UBS Group AG banker, said in July that the website would phase out online sales of new and used watches while continuing to sell watch insurance and limited editions in collaboration with major brands.
âI have no regrets about anything weâve done at Hodinkee â Crown & Caliber, in particular,â Clymer said in an interview on Friday. âI probably would have done that deal, but just in a different way.â
Clymer said Hodinkee began a sales process last year after being approached by another retailer about a potential tie-up. PJT Partners Inc., a US investment bank, acted on behalf of Hodinkee during the process.
Duffy said Crown & Caliber is not being acquired by Watches of Switzerland as part of the transaction. The online used watch sales business is expected to be sold to another buyer.
Hodinkeeâs online retail commercial activities, including limited edition collaborations, will be directed to Watches of Switzerlandâs US e-commerce site, where the company sells new and used watches including Rolex Certified Owned timepieces, Duffy said.
The sale of used Rolex watches that are certified and guaranteed by the top Swiss brand has become a major contributor to total annual sales for Watches of Switzerland, which are expected to top $2 billion this year.
Watches of Switzerland will also integrate the functions behind Hodinkeeâs insurance agency business. A store leased to Hodinkee in New Yorkâs SoHo neighbourhood before the pandemic but never used, is also not part of the transaction with Watches of Switzerland, Duffy said.
Watch retailers and online trading platforms use editorial content on time pieces to drive interest in the products they sell. Chrono24 GmbH owns a majority stake in Fratello, a European-based watch website that competes with Hodinkee. The 1916 Company, a US-based new watch retailer and online seller of pre-owned watches including Rolex CPO, also produces its own editorial content to help drive sales.
By Andy Hoffman
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Watches of Switzerland said sales of used watches doubled in its fourth quarter from the prior year and are now its second-biggest source of revenue.
