SUNGLASS HUT TO BUY RIVAL
Byline: Jennifer Weitzman
NEW YORK — Sunglass Hut International, the owner of the Sunglass Hut & Watch Station, said Thursday it had reached an agreement in principle for a friendly acquisition of its major competitor, Watch World International, which operates 118 retail outlets.
The deal, which is subject to customary closing conditions, is expected to be completed in June. The purchase price will be roughly $30 million, including cash, shares of Sunglass Hut common stock and assumed debt.
John X. Watson, president and chief executive, said the transaction “further consolidates our leadership position in watches, by approximately doubling the size of our existing standalone watch business. Watch World represents a natural fit, as the customer demographics, brand strategy and geographic expansion strategy of the stores are similar to our 110 Watch Station stores.”
The purchase consolidates two of the largest retailers in the specialty watch arena, as the sector is starting to receive more attention.
Watch retailer Tourneau, which now operates 13 stores, is known for its offerings of high-end brands such as Cartier and Omega. However, the firm recently rolled out a new retail concept called Tourneau Watch Gear, which focuses on opening prices and midrange watches, including Seiko, Swatch and Movado.
LVMH Moet Hennessey Louis Vuitton also recently jumped into the U.S. watch retail scene with a new retail concept called Synchrony, with watches priced from $50 to $3,000.
In an interview with WWD, Watson said he was working on the deal’s points with the founder and the chief executive of Watch World. He said the company planned to research consumer attitudes toward each store, evaluate the strengths and weakness of both and evaluate real-estate options to determine plans for the operations.
Watson said he was considering three operating formats for Watch World: leaving it as it is, bringing it under the Watch Station name or creating more of its already successful combination watch-sunglasses stores. There are now 246 of those units. He added a decision would be made on a store-by-store basis.
Although Watson said he had no preconceived notions, he pointed out, “We feel comfortable one name would make sense,” because of the benefit of having a single entity.
Watson said he was looking forward to taking on his long-time competitor, adding that the deal to join two primary watch specialty chains would make one specialty shop. He said because both businesses work with the same vendors and cater to similar customers, the deal creates a great economy of scale.
Referring to Watch World’s recently revamped Web site, Watson said his company would run it on his firm’s back-end infrastructure, and that it would be operated in addition to Sunglass Hut’s other Web sites, Shades.com and SwissArmyDepot.com.