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Breitling’s private equity owners have halved the Swiss watchmaker’s valuation from 2023 levels as performance has faltered under the joint ownership of CVC and Partners Group.
Both buyout companies are reviewing Breitling’s strategy following pressure from the CVC, three people familiar with the matter said, as the brand has struggled with costly store rollouts at a time of low demand for luxury watches and US tariffs on Switzerland.
Amsterdam-listed CVC handed over majority ownership of the company to Partners as part of a $4.5 billion sale three years ago, after selling a small stake to a Swiss buyout firm in 2021. CVC initially bought the 140-year-old watch brand in 2017 for about €800mn, but retained about a 20 percent stake through 2023 through a new fund.
The 2023 deal was controversial inside Partners Group, according to two people familiar with the matter, because of questions about how much more Breitling could expand after rapid growth under CVC ownership.
Both buyout companies still share control, but Partners Group retains significant influence with more than 50 percent of the shares and Partners co-founder Freddy Gantner chairs Watch Group’s board.
According to a person familiar with the matter, CVC has reduced its stake to about 0.5 times the invested capital, based on the level at which it had reinvested in 2023. Partners Group values its stake at about 0.7 times, a person close to the firm said, as it invested at a lower valuation in 2021 compared to 2023.
Partners Group, CVC and Breitling said that “there was no disagreement among (the private equity firms) about Breitling’s strategy”.
The Swiss watch industry is extremely opaque, making it difficult to assess performance with accuracy. Most major brands are privately held and disclose little financial information.
But Breitling’s momentum has cooled since 2022, with industry data showing that the brand’s lead in the Swiss watch revenue rankings has stagnated.
Morgan Stanley and Swiss consultancy Luxconsult estimate that Breitling’s sales declined by about 3 percent last year, lagging behind both the broader Swiss watch market and the region’s strongest private brands.
The performance in the UK – which accounts for 8 per cent of revenues – has been particularly troubling, one of the people said, with sales in the country expected to fall by 25 per cent by March 2025. In the US, its biggest market, Breitling faces tough competition from brands like TAG Heuer and Tudor.
Last August Moody’s downgraded Breitling’s debts, citing a “sharp” decline in earnings in the year ending March 2025, “exacerbated by increased fixed costs” arising from opening more Breitling shops.
CVC began a store opening program in 2017, but the recent expansion of Breitling’s boutique network to about 300 stores has been controversial, an analyst said. “That rollout is coming to an end,” a person familiar with the strategy said.
Breitling’s owners are now looking to cut costs, the person said.
Known for his chronographs and aviation heritage, Gantner regarded Breitling as a trophy asset for his Swiss firm, a former Partners employee told the FT last year, and a replica Breitling shop sits at Partners’ global headquarters near Zurich. “People were under the impression it was her child,” the employee said.
A person close to Partners Group said Breitling’s momentum relative to direct competitors remains intact, and he is “confident that Breitling will be a strong initial public offering candidate in 2028, maybe 2027, maybe 2029”.
Another person close to the firm said the company has made “significant investments in growth initiatives” such as the purchase of two watch brands and sponsorships with the NFL and Aston Martin.
Moody’s said its rating downgrade was due to Breitling’s “higher sales concentration in a single brand” compared to its larger and more diverse watch groups.
The rating agency also cited the brand’s “highly leveraged financial structure” and history of borrowing to return cash to shareholders. According to PitchBook, the company borrowed more than €1 billion to pay the dividend under CVC’s ownership.
Moody’s said, however, that Breitling retained “ample liquidity” and “positive long-term growth prospects”.
