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Was it Jérôme Biard who was going to save Corum?

February 26 2018

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After years of wandering, and after getting close to the sinking, the watch brand Corum seems to have finally found its captain. The brand was a sleeping beauty and it was up to Jérôme Biard who had the beautiful desire to wake her awake. In an interview without filter, he evokes the confidence of the owner, the Chinese group Citychamp Watch & Jewellery ltd; the mistakes of the past, the drying up of the parallel market and the strategy put in place in order for Corum to break even in 2019, earn money, and regain its luster. -Isabelle Cerboneschi.

J

érôme Biard the new CEO Corum in office since 1st September 2017 arrived as the man of last chance or the providential man, according to the way we see things. In any case, if Corum stands up, it will be under his reign.

His career seems to have been designed to face this challenge: Jérôme Biard worked in very beautiful houses - Cartier, Vacheron Constantin, Girard Perregaux  il  was the director general of LPI, the watches and jewelery division of the Group Weitnauer, a distribution company in the luxury watch industry, where he worked with the Turkish, Russian and Brazilian markets. And above all, he does not have the folly of grandeur; he knows that he is at the service of a brand, a group, and not in the service of his ego. This is what could change everything.

The watch brand was born in 1955 from the will of two men, René Bannwart and his uncle Gaston Ries, who was at the head of a watchmaking workshop. They called it Corum and gave it an attribute: a key turned to the sky. Watchmaking requires know-how along with its mysteries. They created models that made the reputation of this brand hyper-creative, including the first model of the Admiral’s Cup in 1960 (renamed since Admiral), with its box square and waterproof, the watch Monnaie launched in 1964 and renamed the Coin, the superb Romulus (strongly reinterpreted!) created in 1966, the year where Jean-René Bannwart, the son of the founder, joined the brand. We owe him the actual face of the Admiral and the Golden Bridge, launched in 1980, whose magnificent linear gear movement, which seems to float in space, was invented by Vincent Calabrese. René Bannwart had bought the patent.

The brand has had a rather rough history. In summary, it was bought in 2000 by Severin Wunderman, the man who created Gucci watches and who had the good, and the bad idea, to launch the watch Bubble. This model has boosted sales of Corum, but worried the traditional customer. It is still part of the brand's collections. In 2005 Antonio Calce was appointed to head Corum (he became a shareholder in September 2011). Séverin Wunderman died in 2008. René Bannwart in 2010. The group China Haidan Holdings Liminited (which today bears the name of Citychamp Watch & Jewellery ltd) bought the brand in 2013. Let's say that Corum has experienced various fortunes these 20 last years, and more precisely misfortunes: the brand lost between 10 and 20 a million per year until 2014 and it had become rather risky to bet on its future.

But the group Citychamp Watch & Jewelery Ltd. wants to believe in the future of Corum. By naming Jérôme Biard six months ago at its helm, they seems to have made the wisest choice. The new CEO hopes to bring the brand back to balance in 2019.

 

Last February, Jérôme Biard and his team previewed some models that will be unveiled in Basel before an audience of specialized journalists from around the world, just before a concert given at Folies Bergère by the prodigy pianist Joachim Horsley, a friend of the brand and vice versa. Jérôme Biard is one of those rare CEOs who speak without filter: he has nothing to hide and in any case, the worst is behind him. Interview.

IC According to Davide Traxler, your predecessor, the brand would have returned to profitability in 2016 with a turnover of 50 million, but it would still be in remediation phase. How to straighten Corum?
Jérôme Biard: Unfortunately, we have not yet achieved profitability. I think we should break even in 2019.

How do you analyze the past defeat of the brand?
It is the fruit of politics of another time. When we want to open subsidiaries all over the emerging countries, we wanted to do retail when we had neither the expertise nor the collections, nor a brand that lends itself to it. This is extremely expensive. The brand had made debts in a good deal of domains, and especially in distribution. In the 2017 results, a significant portion of the losses are due to losses in the subsidiaries. When one is called Corum, opening a subsidiary in Russia or India is very ambitious: they are very complex countries and so it did not make sense. Opening a Corum shop at Ventura Mall in Miami was not realistic. All of these subsidiaries have been closed, but there are still costs that we have to digest today.

There were other management errors that put Corum on the brink of collapse: too high working capital for example?
Corum has indeed suffered from a working fund badly used. The strategy of buying components in astronomical proportions, simply to drive down the cost price, and end up with a mass of unused components, which has put the company in a difficult economic situation. You have to be aware of the strength of your brand and have the courage to ask yourself how much is the true sales potential. Today society is in the process of stagnation.

What strategy have you adopted to clean up Corum?
We have put order in the collections, we make fewer references, less new products just to make a novelty, we extend the life cycle of the product, and especially we have stopped spending in a luxury was. It is not because we are a luxury brand that we have to live in luxury. Luxury is for customers. We are fortunate to have a strong group financially behind us, the brand does not have to be a dancer. This is not how it is understood by investors. But I think it takes time. Nothing can be done quickly that can last, but we have long-term goals. In 2017, the turnover was very slightly down compared to 2016 (about 48 million, ed). But we made good progress at the level of the gross profit margin. We have to make sales, but that's not the end.  We have entered a strategy that will allow us to gradually improve the margin to ensure the sustainability of the brand.

What is the expectation of the owner group?
The owner's expectation is not excessive. He does not want to make a fortune with Corum. He owns watch brands in China, including Rossini, which generates the biggest turnover of all the brands of the group and the profits of 40 millions of Swiss francs. What they want from us is that we give Corum value and make some money. This is quite legitimate on the part of an owner. We must stabilise the situation and prove that the company is sustainable.

What is your goal in terms of numbers for 2019?
I'm going to talk about profitability; we want to have a higher operating margin. The objective is already to reach the break-even point in order to start repaying the loans from which the investor has benefited and to be autonomous in terms of liquidity, which is not yet the case. We need a bridge loans. For six months we have been able to obtain a lot of bridging loans that will help us to progress. The owner understood that we needed money for this. We must reassure him, be transparent, share information. This is not a problem for me; I am not a shareholder in the company, I am an employee and I want to show that I can run the business in the most healthy and transparent way possible. I do not sell dreams.

Many Corum watches are traded on the parallel market or you produce about 10'000 watches a year. Is not that a bit too much compared to what the market can absorb?
We are aware of it. We have dried up the parallel market; for six months there is not a watch that has been left in this market.

How do you know?
Because a lot of the watches were from the factory! I do not blame what has been done before: the brand needed cash flow. But to have cash flow, I prefer to work differently.

And what do you do with those who go into the gray market from distributors?
There are still some, but we can control it. We made secret purchases. The last one we did recently was with a distributor in the United States. We bought the watch, we paid for it, we received it, we took pictures, we sent it back saying that we did not like it, we were asked to send it back to a certain address We were refunded on our credit card, then we went to see the person who had done this giving him a yellow card. If I want to succeed with Corum, I have to make sure that the price is respected. I like to take the example ofAudemars Piguet who solved this problem very well. If they have succeeded, why not us?

It may take a little while ...
Yes, but we decided to invest as Rolex in an electronic guarantee system: when the retailer sells a product, to validate the guarantee, he must enter a code in the credit card machine. This provides information on the live transaction. We will initiate this system to Baselworld. We want to follow what comes out of stores and know if we are producing too many watches compared to what the market can digest. Sales by market have progressed well, which proves that the drying up of the parallel market is paying off. We also make things more complicated for people who have bought our watches on the gray market; when they come back to us for service, in addition to the official warranty, we will ask for proof of purchase. The person will have to return to the site that sold them the watch. Finally we will launch our own e-shops within a month, communicate with our end customers. And maybe we will discover that it is better to produce only 6000 watches, but sold at the right price, on the right network.

It seemed to me that you did not want to go on e-commerce?
I did not want to live on Amazon. But selling on the net is the present day.

Will you communicate about the brand, or just do dry sales on these sites?
We want to pass messages to the final potential customer. We want to create a database as if we were opening a hard shop. With the means of Corum we will never have huge budgets, so we must optimize our relationship with customers.

What do you mean?
By talking to him. He will contact us on the e-shop, there will be exchanges. We will publish short films about the brand, by storytelling, this way we will pass the message of the brand.

Is it Monsieur Kwok Lung Hon, the owner of the group Citychamp Watch & Jewellery ltd intends to invest in the brand now that he sees a thinning?
He never stopped investing! And he continues. But he would like to stop the surprises. There have been many since he bought the brand and never good ones. He wants to stop the bleeding and achieve stability. What interests him is that we value the brand and that in ten years he says: "Wow! I bought it for such a price, I had to invest so much, but today it's worth so much again. "And he'll be proud.

When Haiden had bought Corum, the market did not believe it. However, there is an evolution on the part of Chinese groups with interests in Europe recently. In the world of fashion, for example, when previously the Chinese were only copies, we see emerge real creators, and a desire to return to crafts craft that had been rolled by the Cultural Revolution . And the reluctance of yesterday no longer occur today. I have the impression that there has been an evolution since the acquisition of Corum and that the goals and language have changed.
I completely agree. I'm coming back from China. The brand Rossini, who belongs to the group, is a city in the city. If you see the organization of the factory! The components are stored in temperate chambers. It's impressive. We would have to learn from them, even in Switzerland. They created the first watchmaking museum in China. They bought parts, they madereplicas of what existed to be able to tell this to the Chinese, and thirty busloads of visitors arrive every day. These people come to visit the museum of watchmaking, the manufacture, it makes a small passage in shop, and that's it. The group does not need money. They want to show that they can succeed in what they have done, including an investment in Europe, in the European mindset. I am lucky to arrive at a favorable momentum and not at the moment of the buyout, where they had a disproportionate view of the reality of the market in Europe. I do not feel a pressure. There is a true love of the product. It is rather a pleasant surprise. We are not asked to do chinoiserie, if you forgive me the expression: you will not see any dogs on the dials to celebrate the year of the dog. Chinese groups have long had bad press. But it's not harder to work with them than with Russians, Americans or Italians. And I speak of it knowingly. For me there is no ideal nationality in the work: you have an owner and you have to deal with his character, his culture and especially to tell you that it is his company and his money.

You talk about culture, but you worked for a Swiss group that had interests all over the world and especially in Russia, now for a Chinese group, two cultures in the antipodes and yet in both cases it is necessary to show a great adaptability. What did you learn about the Russian market that can serve you with the current owners?
I would say that there is a particularism undoubtedly linked to the history of communism: a passion for details and a greater difficulty in positioning oneself in the medium and long term. We live from day to day in Russia. When the ruble devalued phenomenally in 2014, we never sold so many watches! The Russians wanted to buy before their money was worth even less. Another important point in Russia is the importance of hierarchy. I made mistakes when I arrived.

Which mistakes?
I opened my door, I tried to make management participatory, but it does not work there: it was like an admission of weakness. You have to hit the table and tell them what to do. We can not do a negotiation Win Win In Russia the strongest wins. It's not quite the same in China but the hierarchy is very important. I have to show that I know what I want, that I am very sure of myself and stand firm with my goals.

Regarding the distribution what will keep you?
No shop in own name except an e-shop. On the other hand we have retailers who operate Corum shops: one of them has five in Macaowork extremely well. We will help him, create special collections for him, listen to him, but we do not go into financial risk. We do not invest in these stores. We would like to be present in Shanghai and Beijing, because it is important to develop brand awareness in China and Asia. We have maintained subsidiaries in the United States because it is an important market but we have closed Japan, Russia and India because they are financial pitfalls. In Russia, you have to make a turnover of 10 millions just to absorb the administrative costs and the induced costs. A comma placed in the wrong place can paralyze everything. In Switzerland, we are ill prepared for this because everything is so simple!

Corum has three very distinct lines, the Bubble, the Admiral, And the Golden Bridge... But in the past, Corum was also known for watches with a very creative design like the coin or the Tabogan, in the vain of the Reversobut with a tilt up and down. Will you push forward this design side of the brand?
There is also an 4e pillar: the Heritage collection with the watch Coin. I do not leave a blank sheet in terms of product policy: I have component stocks, boxes, movements, and if I want to improve the financial results, I have to optimize what we have. We will recreate the Corner, but in tune with the times. We will also make the Golden Bridge more contemporary. We are not going to rework the architecture of its movement, but the materials, with more contemporary treatments and approaches. As for the Bubble, we will relaunch it because it allows us to reach a younger clientele. I met customers who bought 5 five or six! It allows us to make partnerships with artists, and to create more crazy things. I dream of reviving the grille of the Rolls. We will take back what has existed, while bringing it up to date, but we will also bring new ideas that did not exist.

You come from the fields of marketing, sales and distribution. You worked in the group Richemont for prestigious brands like Cartier, Vacheron Constantin as well as at Girard-Perregaux. Have you kept any of these recipes applicable at Corum?
I would not talk about recipes, but when you come to manage a beautiful brand, all my experiences, everything I saw, serves me. I knew an extremely creative Richemont, trainer, avant-garde in many areas, a group that created the SIHH, the AIHH. I met exciting people, who opened me to a world I did not know. They were flamboyant personalities. I think I kept a sense of luxury, the product, even if indirectly with the production. I ask myself a lot of questions and to go to the end of the ideas, that's what I have left of those years. Leading Corum is a great challenge: it comes at the right time.

Why this evening did you have the pianist Joachim Horsley and how does he correspond to the values ​​of the brand? What did you want to convey as a message?
The goal is to show that we associate with a talented man, who, like a watchmaker, needs to work on his scales for hours in order to get to this level of playing. He gave his first concert in Europe this evening. He has succeeded in film music, he is behind the soundtracks of some movies from Dreamworks yet was unknown to the general public. His way of interpreting classical music is fashionable in Cuba, his way of taking the piano as a global instrument is what we want to show with the Golden Bridge. It's watchmaking that is neither classic nor bombastic: it's contemporary.

Do you consider him an ambassador?
He is a friend of the brand. We do not have ambassadors in the typical sense. We do not pay them. We can create a watch with them, but that's it. Tonight we will offer a watch to Joachim Horsley, a unique piece made for him. He has not seen it yet. The case - a music box that includes three of his arrangements - was developed with the manufacture Reuge. This is the first rectangular Golden White Gold Bridge, with gold structures covered with PVD black, to recall the keys of a piano. An excerpt from the original score of Beethoven's 7th Symphony is engraved on the sapphire metallic background. This personalization opens the door to so many other things: we will be able to propose to our customers to personalize their watches with excerpts of books, coats of arms, to create to them a piece to measure ...

"The owner does not want to make a fortune with Corum. What he expects of us is that we give back value to the brand. "

"We put the collections in order, we make fewer references, less news, we extend the life cycle of the product, and especially we stopped the sumptuary spending. It is not because we are a luxury brand that we have to live in luxury. Luxury is for customers. "

"Maybe we will discover that it is better to produce only 6000 watches, but sold at the right price."

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