It is five years since Georges Kern blindsided the Richemont Group by announcing he was off to head up Breitling, the independent Swiss watch company.
The former IWC Schaffhausen chief executive was a Richemont veteran of 17 years and, less than a year before his shock departure, had been promoted to the Richemont board and appointed the group’s head of specialist watchmaking.
The divorce may have been unexpected, but the marriage of Kern and Breitling so far has proved harmonious. According to a report by Morgan Stanley last month, Breitling’s annual revenues surged to an estimated SFr680mn ($730mn) in 2021 — an increase of 55 per cent over the past two years.
The report’s authors also calculated that Breitling’s volumes had increased from 140,000 watches a year to 190,000 over the same period and that its market share had increased by 0.4 per cent.
The same report showed that Breitling appears to have outperformed many of its competitors under Kern’s leadership. Morgan Stanley’s data placed Breitling 11th among Swiss watch brands, up two places from 2019 and above rivals such as Tudor, which is owned by Rolex, and LVMH-owned Hublot.
“Breitling is substantially above the industry’s average sales growth and even more so bottom line,” says Oliver Müller, founder of Swiss watch industry advisers LuxeConsult and one of the authors of the Morgan Stanley report.
Kern’s appointment at Breitling followed the news in 2017 that London-based private equity group CVC Capital Partners had taken an 80 per cent stake in the company, in a deal worth €840mn. Kern, who has a 5 per cent stake in the business, was seen as having the right combination of Swiss watch industry experience and the sort of maverick tendencies that would shake up a brand in need of fresh thinking.
As Richemont founder and controlling shareholder Johann Rupert said at the time, Kern had “been offered an interesting opportunity to become an entrepreneur”.
Sweeping changes followed. Out went the salacious pin-up girls and the high carbon-emitting Breitling Jet Team, and in came a raft of new brand ambassadors, led by Hollywood A-listers Brad Pitt and Charlize Theron, organised in “Breitling squads”; plus an easy-going, loft-style boutique concept; sustainability messaging around recycled straps and packaging; and a range of new watches, many of them aimed at women — a new take for the brand.
Kern is known for his intensity but, sitting in his office, wearing an open-necked shirt and a sweater, he cuts a relaxed figure. He is still ready to take a thinly veiled swipe at his former employer, though. “I truly believe that we wouldn’t have been as successful in a group,” he says. “We’ve been radical. And we’ve been totally free. They [CVC] let us work — we are the specialists, the professionals.”
He might have a point. While Breitling accelerates, revenues at Richemont watch brands IWC, Jaeger-LeCoultre and Panerai have yet to return to their pre-pandemic levels, according to the Morgan Stanley report. Kern will not confirm Breitling’s figures but says the Morgan Stanley numbers are “most probably true” — adding that, because it has no group costs, the company is very lean and has been able to be “hugely profitable”.
He continues: “People said we would crash this company. Watches are very emotional. When you change so much, you have to gain more than you lose. Of course, we lost customers. You need to score more goals than you concede — and we scored many more.
“We gained huge market share during Covid, which shows our values worked. I’m convinced that, without these changes, the company would be bankrupt today.”
Seasoned industry observers say Breitling has been the making of Kern. Kristian Haagen, an author and creative director of social media agency DailyWatch, met Kern in the mid-2000s, not long after he became chief executive of IWC. “He appeared to me to be quite arrogant, honestly,” says Haagen of their first encounter.
“For years, it was almost impossible to get an interview with him. But he did something good by moving out of a group. It released him. He’s very savvy and he’s doing something that no group would.”
Kern says he wants Breitling to be “the leader of neo-luxury”, a concept based on being “not exclusive, but inclusive; casual; and sustainable”. The company now has 160 boutiques around the world, with plans for 40 more this year. These offer facilities such as pool tables, bars and trendy furnishings, designed to reduce the sense of intimidation some new customers might have at the door of a luxury store.
Changes to Breitling’s image have been accompanied by a collection overhaul. The company was once famous for its pilot’s watches, but Kern has introduced what he calls an “air, land and sea” approach. He describes most of his lines as being “retro style”. Some are reinventions of mid-century products, such as the Premier and Top Time lines, while he has also reworked the popular Chronomat line, originally from 1984. This year’s big launch, announced in Zurich earlier this week, is a revamp of the Navitimer, a distinctive line of pilot’s watches created in 1952.
Kern has also targeted female consumers with smaller, sometimes pastel-shaded designs, and says the company now sells 12 per cent of its watches to women — up from almost zero five years ago. He says he is aiming to grow this to 30 per cent within three years.
During the pandemic, he proved himself one of the more active watch industry bosses, launching a series of webcasts called Breitling Summits. These had high production values and cast Kern as the star, hosting interviews with Theron and introducing the new recycled packaging concept alongside the Swiss explorer and clean technology pioneer Bertrand Piccard.
Kern has since claimed these webcasts attracted “millions” of viewers, justifying his decision to take Breitling out of the annual trade show cycle. Unlike Rolex or Tag Heuer, Breitling is not at Watches and Wonders in Geneva this week.
Breitling’s growth has attracted further investment. In 2018, CVC bought the remaining 20 per cent from former owner Théodore Schneider, and, in October last year, the independent investment firm Partners Group took a 25 per cent stake. No financial details were disclosed at the time, but it was reported that the deal gave Breitling a valuation of $3.3bn.
“Partners Group are no mugs,” says Jon Cox, an analyst at Kepler Cheuvreux. “Kern gets what younger watch buyers in that price point are interested in — style, style, style. And the nod to environmentalism also goes down well.”
Kern may have invested heavily in boutiques, but he continues to develop Breitling’s third-party retailer network, as well. Brian Duffy, chief executive of Watches of Switzerland Group, which operates 10 Breitling boutiques in the UK and US, says Kern’s repositioning of the brand has been good for his business. “Group sales of Breitling watches are up 212 per cent over the past five years,” he notes.
“Georges has great vision and huge energy,” adds Duffy. “And he’s much more comfortable using his skills in a brand situation than he is managing a portfolio — he’s less a corporate guy and more a make-it-happen guy.”
As if to make the point, Kern posted a video last month on LinkedIn from an antiwar march where he was demonstrating against Russia’s invasion of Ukraine.
Asked about his plans and whether CVC intends to sell the business, Kern is non-committal. “I don’t know whether there will be an IPO,” he says.
But analysts expect one. “I would not rule out an IPO at some point in the future,” says Cox, “although [for investors] only having one brand may be more of risk than being part of a larger portfolio, in terms of investment profile.”
Kern expects his business to continue growing. “Luxury will become more and more popular and there will be hundreds of millions of people able to buy luxury,” he says. But not everyone will profit, he adds.
“Because of globalisation, people are all buying the same things. There will be six or seven [watch] brands making 80 per cent of the turnover.”
Looking back on his move in 2017, Kern says he has only one regret. “I should have done it earlier,” he says. And his ambitions are undiminished. “When you do stuff, you want to have fun, intellectual satisfaction — and you want to win,” he says.