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Movado-Olivia Burton Deal Looks Good On Paper

Jul. 05, 2017 12:14 PM ETMovado Group, Inc. (MOV)1 Comment


  • Movado makes an interesting purchase with the acquisition of Olivia Burton.
  • The bolt-on deal looks nice on paper, adds to growth potential and allows Movado to connect to younger customers.
  • I like the deal, even if Movado still has a lot to prove, including the challenge to continue to motivate Olivia's management team.

Movado Group (NYSE:MOV) is using a portion of its fat cash position to grow the business, as it's acquiring the Olivia Burton brand, a popular watch and jewelry brand in the UK. The deal is welcomed by investors despite the relatively steep sales multiple, though it's not really that steep given the growth of the business. This deal brings growth and, more importantly, a connection to a younger generation of customers. This is much needed as it could act as a platform for Movado to revive its core business again.

I like the deal, although the company still has a lot to prove. While the valuation for Movado remains very modest, shares have risen 25% from the recent bottom already. That makes me a buyer in the low $20s as the wider retail landscape has many opportunities at this point in time.

The Deal

Movado has acquired Olivia Burton, a rapidly growing fashion watch and jewelry brand, in a deal that values the company at 60 million pounds in cash. The company was only founded in 2011, focused on watches at first and has added a jewelry line as of last year.

The fashion and vintage-inspired business has grown rapidly, and is in great demand as collections are released every two months at a acceptable prices. Olivia Burton's products are found at retailers such as John Lewis, Argento, and Selfridges. While these names might not ring a bell to all investors, it also has a concession at Topshop's flagship location in London. It products can now be found in Nordstrom as well.

The deal does not come cheap, but the growth is impressive. Revenues were up 64% in the 12 months leading up to March of this year, when they came in at 15 million pounds. This revenue number is expected to grow to 25

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