Poon turns a corner with a brand of his own
Dickson Concepts (International) is diversifying into the high-margin brand-building business by acquiring a Swiss-based watch company and will spend up to $200 million to rejuvenate the ailing brand.
'It is our first wholly owned brand,' chairman Dickson Poon said yesterday, after announcing his company had bought the entire issued share capital of Bertolucci.
Bertolucci makes watches that range in price from $10,000 to $1 million each, but the brand has lost much of its shine.
'Performance at Bertolucci remained marginal as sales have been declining, so we got this rare buying opportunity,' Mr Poon said.
Without disclosing how the purchase was financed, Mr Poon said Bertolucci was a tremendously undervalued asset that would achieve a huge leap in turnover, profits and capital appreciation once Dickson's brand-development strategies had been implemented.
Dickson would spend $100 million to $200 million solely to refresh the brand over the next two years, Mr Poon said.
A new watch collection would be ready for the Basel Watch Fair in March, he added.
The brand-building investment could 'easily generate 10 times or 20 times our investment in return', he said.
Selling a wholly owned luxury brand would generate much higher profits than distributing another company's, which would provide gross margins of 46.5 per cent, he said.
The group sells 'several hundred' luxury brands - including Brooks Brothers, Polo Ralph Lauren and Bulgari - in Hong Kong, Taiwan, Singapore, Malaysia, the Philippines and the mainland.
With the group's 388 shops and shop-in-shops retail network in Southeast Asia, Bertolucci would receive maximum exposure to reinforce the prestige of the brand, Mr Poon said.
After buying Bertolucci and paying interim dividends of $36.7 million, the group still had more than $700 million in cash, he said.
He also announced two other projects yesterday: a 100,000 square foot lifestyle store in Chengdu and an exclusive long-term licensing deal to sell, distribute and promote the fashion brand of Michael Kors.
The lifestyle store in Chengdu would break even in its first year of operation and turn profitable in the second, he said.
The group is applying for a foreign wholly owned retail licence and expects the store to open by the end of the year.
'It has not yet been decided whether it will be called Seibu or Dickson,' Mr Poon said.
