A “divorce” tends to be an expensive event with unknown outcome. That is true in real life as well as in business. I guess the only sure winners are always the lawyers. Girard-Perregaux was founded as a family business, took off to new heights under the ownership and management of Otto Graef and then again rejuvenated under the family ownership and management of Luigi Macaluso and his sons. For a good decade it has been owned by one of the largest luxury brand conglomerates, the Kering Group.
Unlike LVHM, Richemont or Swatch Group which are the other big players in the watch business, Kering never really had a large stake in watches. It seemed like a little side business not paid much attention to by the Kering Group. The years under Kering at GP had seen frequent management changes, strategy changes and a general loss of direction of its collection. The long >230 years tradition seemed to have been side-lined.
So what does this Management buy-out just announced could mean to the future of GP? I would say that it is hard to predict. On the one hand, I think being independent from a large conglomerate will drive focus and innovation and increases the stake of the responsible management. On the other hand, not having a group in the background that could provide financial backing in times needed poses a risk as well.
In general, I think the change is positive if GP can take a few important steps to lay the foundation for a longer-term growth and financial success.
I make no secret that Ulysse Nardin is not my favourite watch brand and I think GP and U.N. are very different in their DNA and potential customers. I hope the management will take the right steps to preserve the brands individual characteristics. I wish U.N. all success of course and it can only benefit GP, but I would really not like to see that both brands start to blend in with each other. There have been some recent releases from GP that suggest otherwise, so hopefully this is not going to go any further.
GP really needs to focus on its strengths and the markets where it has a good share and growth potential. I think there is not much of a point in running after Nautilus or Royal Oak clientele, they will rather spend multiples to get the original. Don’t get me wrong, the Laureato has its place in the market and should remain but in a more focused and classic appearance. The markets in Eastern Europe and Far East have still a lot of potential for GP with their classic dress watch collection and the Ladies watch collections. This needs new innovation and focus in my view.
If we look back at the time when Luigi Macaluso took over GP in the early 90s, it took a few years and a lot of investment on all fronts to #makegpgreatagain starting with the development of an inhouse automatic movement, revamping the collection, investing heavily into the retail chain and marketing and co-operations (Pour Ferrari). I hope the new owners bring the needed patience and strategy to get this old manufacture back on the map where it belongs.