Plunging Shares of Top Rolex Retailer May Be Warning to Red-Hot Watch Market

[WBaileyii]

Originally Posted by EEpro

This article has another take on the results. Luxury watch sales were up 22% to £340 million.

Obviously a decrease in jewelry sales scared the investors off.

"CEO Brian Duffy said recession fears and the rising cost of living have not stopped customers from buying luxury timepieces."

https://www.standard.co.uk/business/...-b1059024.html

Revenue was up, but what about volume? I wonder if they were just unloading all the high end stuff because they see a slow down coming and want to make sure they aren't stuck with really expensive watches they can't sell...it will be interesting to see what the next quarter results show.

[amh]

Slowing jewelry sales? That means people are less willing to buy marked up diamonds when building the coveted AD Relationship.

[dannyp]

Doesn’t matter how good sales are if the company isn’t making sound financial decisions. And right now, I wouldn’t be betting on the opening of more and more retail locations with zero ability to scale, sometimes selling items of questionable desirability. Also, if the idea of “bundling” resonates with analysts, they’ll be left wondering about the “mono-brand” boutique strategy when those boutiques don’t sell the most desirable.

[Fleetlord]

Other than ROLEX, Patek and maybe.....maybe Omega / Cartier...the rest of WOS offerings are relatively soft and weak brands @ retail..that includes a weakening GS in their portfolio. GS got off to a hot start with WOS, but it has cooled off dramatically according to local SA's I have personally interrogated.

So, perhaps WOS expected the ROLEX tide to continue to lift sales of all their offerings..but at the end of the day, soft brands are soft brands and they will certainly be the first to feel the sales slump as the general public buyers really don't want watches that lose value (they equate it to "junk")....

[Vince_76]

Originally Posted by huncho

i don't discredit either outcome and whether they go up or down makes no difference to me because i'm not planning to buy or sell. i think i just hate doomers who see prices crashing and post hot takes about the economy or financial markets. there's way too much activity here for me to find examples to PM you but yeah don't take that post as a shot at you, i use that term a lot myself so that wasn't my intention lol. i just think the opinion that a good amount of watches will remain hard to get is definitely the minority opinion today. now that most prices have finally settled around msrp it seems to have calmed down a bit here though

All good man. I really appreciate your thoughtful posts on here, and I know it’s not a shot at me (hopefully others think the same). I think your stance is very reasonable tbh. Who knows exactly where we’ll end up. I think MSRP +/- 10% will be the norm for many of the “hype” references we saw.

[dannyp]

Originally Posted by Fleetlord

Other than ROLEX, Patek and maybe.....maybe Omega / Cartier...the rest of WOS offerings are relatively soft and weak brands @ retail..that includes a weakening GS in their portfolio. GS got off to a hot start with WOS, but it has cooled off dramatically according to local SA's I have personally interrogated.

So, perhaps WOS expected the ROLEX tide to continue to lift sales of all their offerings..but at the end of the day, soft brands are soft brands and they will certainly be the first to feel the sales slump as people really don't want watches that lose value (they equate it to "junk")....

Said in group website that there’s at least one AP boutique in the portfolio.

But you’re academy right, and that is why a stand-alone TAG or Breitling store is a stupid idea. Absolutely no opportunities to bundle, nor start a “relationship” of the kind many do. Result will be idle inventory, deep discounts, and steep rent.

Investors and analysts (many of whom are also probably buyers of expensive watches and have firsthand experience) are going to figure this out.

[Fleetlord]

Originally Posted by dannyp

Said in group website that there’s at least one AP boutique in the portfolio.

But you’re academy right, and that is why a stand-alone TAG or Breitling store is a stupid idea. Absolutely no opportunities to bundle, nor start a “relationship” of the kind many do. Result will be idle inventory, deep discounts, and steep rent.

Investors and analysts (many of whom are also probably buyers of expensive watches and have firsthand experience) are going to figure this out.

I missed they have an AP spot...I don't see it on their site..but it's so exclusive that it's not listed..

https://www.watchesofswitzerland.com/c/Brands


But yeah, I think these execs just thought that all their offered brands would just continue to rise in sales as people just bought any watch because of the ROLEX unavailability...but that was all a mirage and the first of the segment to fall as people really don't want those brands and when the SHTF as projected, they will be cast aside as toxic poison. Then all the nasty markdowns and clearance cases will pop up further ruining those brands....meanwhile Rolex will keep on keeping on.

[dannyp]

Originally Posted by Fleetlord

I missed they have an AP spot...I don't see it on their site..but it's so exclusive that it's not listed..

https://www.watchesofswitzerland.com/c/Brands


But yeah, I think these execs just thought that all their offered brands would just continue to rise in sales as people just bought any watch because of the ROLEX unavailability...but that was all a mirage and the first of the segment to fall as people really don't want those brands and when the SHTF as projected, they will be cast aside as toxic poison. Then all the nasty markdowns and clearance cases will pop up further ruining those brands....meanwhile Rolex will keep on keeping on.

Looks like there’s an AP one in the US (if you look at mono-brand boutique section). EDIT: It's on the WOS Group corporate site, not the retail site.

Think there was also a miscalculation about the purchase of other brands: people weren’t doing it because of no Rolex but because it was the path to Rolex. But, a location without Rolex and…

Applies Patek, some VC, for the record.

There’s also the question of how well they have been able to operate Mayors, which isn’t just watches.

[Fleetlord]

Originally Posted by dannyp

Looks like there’s an AP one in the US (if you look at mono-brand boutique section).

Think there was also a miscalculation about the purchase of other brands: people weren’t doing it because of no Rolex but because it was the path to Rolex. But, a location without Rolex and…

Applies Patek, some VC, for the record.

There’s also the question of how well they have been able to operate Mayors, which isn’t just watches.

Oh peeps were buying up other stuff to get in favor for Rolex allocation too..but they're were a lot of anecdotal comments on forums about people buying other brands in lieu of Rolex....so I didn't balance that with the reality of bundling that has also been occurring...

[dannyp]

Originally Posted by Fleetlord

Oh peeps were buying up other stuff to get in favor for Rolex allocation too..but they're were a lot of anecdotal comments on forums about people buying other brands in lieu of Rolex....so I didn't balance that with the reality of bundling that has also been occurring...

True, there was a lot of "ok, I'll get my third, fourth, or fifth choice" but I'm guessing that this was happening in locations selling Rolex or Patek. Bad news delivered, disappointment sets in, desperation takes over. Those are the first of the twelve stages of watch-grief, right?

[enjoythemusic]

Imho, longterm we're very well ahead of where things were only a few decades ago. Yes the rate of growth will / is / may be slowing a bit, yet on 'the grand scale' the demand for mechanical watches is very good. From entry-level and mid-range to horological art is still healthy. Especially compared to the 1980s, or 1997, and of course 2008... mmmaybe 2024.

As for WoS, they offer more than just PP and Rolex and... They opened an MB&F Gallerie in London (need one in Miami hint hint), they stock Jacob & Co (their sales are very much on the rise), Moser, Omega (didn't see anyone mention Omega), Armin Strom, Bell & Ross, IWC, Panerai... and many others.

https://www.watchesofswitzerland.com/c/Brands

Long term I feel the health and love of horology will continue to grow. But yes, dips along the way. WoS is securing prized locations while also expanding to be well-positioned for the next wave up. Tho yes, think the massive growth RATE has slowed its' pace, but we're good.

jmho ymmv

[dannyp]

Originally Posted by enjoythemusic

WoS is securing prized locations

This is what they're likely getting beat up on by the analysts. WoS has accepted "certainty" in the form of overhead while facing great uncertainty in terms of the near-term market for its brands.

[enjoythemusic]

Fair enough, yet long-term we'll have another leg up (higher highs). jmho

[TheVTCGuy]

Can someone explain to a Dorklehead about all matters economical and financial….


What does this all mean? The watch industry is headed for a recession?

[Easy E]

Originally Posted by TheVTCGuy

Can someone explain to a Dorklehead about all matters economical and financial….


What does this all mean? The watch industry is headed for a recession?

Absolutely

https://www.newyorkfed.org/microeconomics/hhdc