Callanen Group Inc, which produces Guess brand wristwatches, is becoming a force in the fashion watch world. The Guess line is one of the three most popular watch brands in US department stores and contributes 85% to Callanen’s sales volume. Wholesale volume is expected to be over $70 million in 1992, an increase of 33%. Timex Corp acquired Callanen, contributing technical expertise to improve watch quality and production capacity, although Callanen operates as a separate unit. Timex is also helping to fulfill Callanen’s desire to expand the scale of its overseas distribution.
The Guess brand name is getting as well known on the wrist as it is on then rear.
The licensed fashion watch line, produced by Callanen Group Inc., has turned into a powerhouse, generating sales upwards of $60 million wholesale this year.
Eight years ago Mickey Callanen, who was an executive at Monet Jewelers, decided to start a watch firm and launched the Guess collection. Since then, Guess has emerged as one of the three leading watch brands in department stores (the other two being Swatch and Fossil.)
The success of Guess watches has captured the attention of many, including Timex Enterprises. Timex purchased Callanen Group, Inc., the firm holding the license for Guess watches, last October.
Callanen, who continues as president of Callanen Group, said the firm’s volume will be over $70 million wholesale in 1992, a 33 percent volume gain. He said 85 percent of the volume is done with Guess and 15 percent with the two-year-old licensed Monet watch line.
While Callanen continues to operate independently from Timex, it’s already gaining benefits from Timex’s experience.
It was propitious timing when Timex expressed interest in Callanen Group, because, Callanen said, he was exploring the international market for distribution.
“It’s very hard to find good distributors overseas,” said Callanen, “and with Timex’s strong relationships around the world, I felt they could do nothing but help us.”
While he would not disclose the terms of the acquisition agreement, he said: “Timex paid a lot of money.” In the agreement, Callanen has a contract that keeps him in charge of the company for eight more years. His partner, Bud Polley, remains vice president, sales.
In addition to helping Callanen establish relationships with distributors overseas, Timex is improving the quality of Callanen’s watches. Callanen said when his new manufacturing facility opened in Hong Kong, Timex sent its engineers over to improve quality, and they brought the production capacity up 38 percent.
“Other than that, though, it’s like Timex is not around,” said Callanen.
Michael Jacobi, executive vice president and chief operating officer of Timex, said his firm was not looking to manage another company, but to acquire a firm with a strong existing management team.
“We are a lean corporate organization that can’t absorb companies within our management structure,” he said. “We kept Callanen’s management and company culture the same.”
Jacobi said his firm has been considering acquiring several watch firms because it wanted to strengthen its distribution in department stores. Including the Callanen brands, Timex has 11 watch brands.
Now that Callanen has Timex’s connections, the firm is aggressively going after international distribution.
“Huge growth will come from overseas business,” said Callanen. “It could be 35 percent of our business in one to two years.”
Callanen started its international distribution nearly two years ago in Australia through a Sydney-based distributor. Callanen said the firm will sell 100,000 units of Guess watches there in 1992.
A year ago, he started selling Singapore, Malaysia, Hong Kong and Korea, and last month shipped to Canada, England, Portugal, France and Germany.
“I don’t see any stores overseas that devote the kind of space to fashion watches that U.S. retailers do, with the exception of Galleries Lafayette,” said Callanen. “There’s a big business out there.”
Paul Marciano, senior vice president of Guess Inc. said Callanen does more volume with Guess label than any of his other licensees, which include fragrance, shoes and legwear among others.
“It’s Mickey’s devotion, personality and energy that has helped make this line a success,” said Marciano.
Callanen attributed a lot of the success of Guess watches to the fact that new merchandise is continually introduced. But he also said he is just in a good business.
“The consumer sees fashion watches as wonderful value for their money,” said Callanen. “In addition to being fashionable, watches are a commodity.”
Joanne Hart, fashion director for Macy’s East, said, “Guess has been phenomenal for us. The name is very recognizable and the styling is great.” She noted the chronograph, scuba and animal-print strap watches are among the top sellers.
Callanen is based in Norwalk, Conn., and all production is done in Hong Kong, where the company employes 17 designers.
The Monet watch line has been slower getting off the ground, Callanen noted, because it’s a narrower focus featuring mostly chain looks.
He said the biggest direction in watches is sport.
“Sport watches are moving the average unit sale up in the fashion watch department,” he said, noting the average Guess watch had sold for $52 retail last year and now it’s $68,
Callanen said he would consider adding more watch brands, “if they made sense with our mix and did not conflict with existing lines.”
He is as enthusiastic about the business as ever and has no plans to leave the company that he started out of his garage. “I am having too much fun to leave. I can’t imagine doing anything else but this.”