Luxury watch maker Movado Group (NYSE:MOV) is buying a peer company in the U.K. Movado announced it has acquired JLB Brands, a privately held business that owns the Olivia Burton line of watches and jewelry. The price is roughly 60 million British pounds ($78 million), all of which will be paid in cash.
JLB Brands is a young company, having been founded in 2011. In spite of its relative youth, its products are available at some of the most recognized apparel and accessories retailers in the U.K. and certain markets abroad. According to Movado, in its fiscal year ended March 31, the British company's sales rose by 64% to approximately 15 million pounds ($19 million), which is expected to grow to 25 million pounds ($32 million) this year.
Movado expects the acquisition to be immediately accretive to its results. The deal was funded by cash on hand from Movado's non-U.S. subsidiaries, the company said.
Does it matter?
The JLB Brands acquisition isn't exactly complementary for Movado Group; Olivia Burton products are edgy, daring, and inexpensive compared to Movado's typically traditional, high-end offerings. Yet the U.K. brand clearly knows how to win customers. That growth rate and distribution profile are impressive for a company that came into existence only a few years ago.
It seems to be a smart move, then, that the new owner will let JLB Brands' founders, Lesa Bennett and Jemma Fennings, run the business. They appear to know their market, and have obviously done a good job of growing the company so far.
An advantage for Movado is that it won't have to introduce Olivia Burton wares to the U.S. market. Bennett and Fennings have already taken that step, striking a deal with Nordstrom (NYSE:JWN) that saw the brand introduced in the retailer's stores last summer. Movado said that Olivia Burton products were available in 117 Nordstrom outlets as of January.
Olivia Burton appears to have a promising future, and seems to be led by clever and ambitious management that will be given a relatively free hand to continue growing the business. I'd say it's a good play for Movado that its shareholders should find encouraging.