UK Price increase imminent

[Shaky]

If this situation was replicated for something like an electronic piece of equipment, I think the manufacturers wouldn't care about the financial disparity as they would be selling everything they could produce, sheer volume would soon make up a slight loss in profit per unit.

It would be interesting to see figures if Rolex just kept punting SS sports watches into the UK.

If some of the stories about London AD numerous calls per day and walk ins asking for watches is true, they would be laughing at the minute

[Haywood_Milton]

The OP has been on the forum again this evening. I'm puzzled why no further post.

[Bob the brush]

I went to my AD last Monday to drop my TOG off for warranty work, enquired about an Air King, which they hadn't in stock, I got a call this morning, they just had one delivered, it's mine if I want it. They are holding this for me till Saturday. It will be a long week!

[garyfromleeds]

" Wigan Steve " has now left the building

[AK797]

Originally Posted by Devildog

I'm not so sure

Its highly likely that Rolex SA will sell to its retail network accross europe in either Swiss Francs or Euros. If thats the case Rolex SA will make the same profit on every unit sold at a given price irrespective of what juristiction they are selling to.

Its the retail dealers who suffer a fall in margin if their local currency weakens against the manufacturers sale currency, and the retail dealers who also benefit from the upside if their local currency strengthens.

For as long as I can remember the UK has never been awash with SS Sports stock. Certainly when the pound has been strong it's not been that much better.

The US will be a massive market for Rolex compared to the UK. US dealers will shift many more watches and therefore Rolex will give them priority.

I don't believe Rolex SA in Geneva is withholding UK stock. It makes no sense for them to do that, financially or otherwise.

It does, however, make sense for Rolex retail dealers in the UK to sell to the grey market and to sell without discount (both of which we a seeing) because their margins are down due to their supply costs being comparatively high due to the weak sterling.

Add in the fact that the UK market is seen as the cheapest place to buy and you end up with the situation we are in now.

I fully suspect the UK AD network is pushing Rolex SA to increase UK prices, simply to get their margins up.




I would agree to a point Neil, however



I don't buy the theory that Rolex SA is artificially restricting supply to UK ADs.

If what we suspect is correct (in that UK dealers have to buy from Rolex in Swiss Francs or Euros) there's no sense in Rolex artificially restricting supply.

A fall in UK dealers margins due to currency value (which would support the premis that they do buy from Geneva in Francs or Euros) would normally be addressed by increase sales volume to sustain profitability.

Increased volume would be a win win for both Rolex and the AD's.

Boy, it's fun to speculate, isn't it, esp when we have no Rolexes to buy so what else!

I think it's a combination of the things we've mentioned; some ADs selling straight to greys, AD's margins being cut if Rolex SA are not giving them cost price discounts, which is unlikely, so they are demanding less Rolexes, and Rolex SA are seeing the currency imbalance and subsequent grey dealer problems in the UK and are less willing to supply in favour of more stable markets.

I've heard from a few ADs that I trust that supply is much lower than last year, and I don't think all ADs are selling straight to greys, I think some are still good guys, so it's probably a combination of factors.

[AK797]

Originally Posted by locutus49

Certain European countries have pressured Rolex to limit Rolexes into the UK as revenge due to Brexit. Conspiracy theory or truth?

I wouldn't say revenge, but when other countries see their customers flying over to the UK to buy here instead, then those ADs will be telling Rolex that this is not fair and that either UK prices need to rise or to restrict their supply or do both to level the playing field.

[Etschell]

Now I know how ops dealer got him to buy pm at full retail.

[AK797]

Originally Posted by Etschell

Now I know how ops dealer got him to buy pm at full retail.

You saying he got played like Jordan's Driver?

[Devildog]

Originally Posted by 904VT

I'm not sure how this makes any sense. Rolex still incurs costs in Francs, including labor units. Sure, if they had a pile of cash (Francs) sitting around they could convert it to another currency and vice versa, but any translations back net nil.

Unless you're meaning that Rolex forces UK ADs to purchase (their agreed upon dealer cost) in unfixed CHF pricing? I'd find that highly unlikely given not the separate entity like Rolex USA, but I guess you never know.

What I was speculating was that Rolex SA sells to its retail network in CHF Much as a US manufacturer would sell to the rest of the world in Dollars. If the pound is weak, the watches cost more for the UK ndealer network to buy from Rolex SA, but Rolex SA receives the same CHF per unit irrespective of how weak or strong the buyer's currency is at a given time.

Originally Posted by AK797

Boy, it's fun to speculate, isn't it, esp when we have no Rolexes to buy so what else!

I think it's a combination of the things we've mentioned; some ADs selling straight to greys, AD's margins being cut if Rolex SA are not giving them cost price discounts, which is unlikely, so they are demanding less Rolexes, and Rolex SA are seeing the currency imbalance and subsequent grey dealer problems in the UK and are less willing to supply in favour of more stable markets.

I've heard from a few ADs that I trust that supply is much lower than last year, and I don't think all ADs are selling straight to greys, I think some are still good guys, so it's probably a combination of factors.

It is Neil, for sure

My curiosity got the beter of me and I did some digging. It turns out the Rolex Boutiques in the UK are not owned by Rolex but are franchises, much as the Rolex AD network is. Interesting article here :

http://www.watchpro.com/how-to-becom...chise-partner/

For the UK market, ADs and Boutiques source their stock from a UK registered company (since 1915) called The Rolex Watch Company Limited, a wholy owned subsidiary of Rolex Holding SA.

The Rolex Watch Company Limited is supplied with stock direct from Rolex SA.

It would be fair to assume that Rolex pricing in the UK (at least) will be set by agreement between Rolex SA in Geneva and The Rolex Watch Comany Limited in the UK. Given that Rolex SA supplies to The Rolex Watch Company Limited and not direct to the dealers, then the direct imapact of currency fluctuation would hit The Rolex Watch Company UK Limited, as it is having to pay more per unit when the pound is weak.

As a wholly owned subsidiary, that additional cost will directly imact profit and hence the available shareholder return to Rolex Holding SA. But of course "Rolex" will determine how much of that profit is taken as a dividend and how much is left in reserves. In 2015 The Rolex Watch Company made a net profit after tax of £15.8m, paid a dividend to Rolex Holding SA of £8m and had retained profits on its balance sheet of £107m. So its got room to manoever with currency fluctuations!

The big question is whether the price the dealers pay The Rolex Watch Comany Limited for stock is fixed or floating and where the actual supply restrictions are (if they actually exist)

I doubt we will ever know, but in light of the above, I remain to be convinced that there is a Brexit/currency related supply restriction due to loss of revenues in the UK

You may well, however, be on to something regarding pressure from the other markets

[KarlS]

I agree with Scott

Obvioulsy they have an exposure between GBP / CHF being its largest markets with only about GBP 5.6 mio comingfrom Ireland which is EUR (3%).

In fact they did make a small FX gain in 2015 of GBP 1.3 mio and GBP 753 mio in 2014. The question is that the pound slumped in 2016 and 12017. So those are the financials that will have more relevance. Since 2 months to know!

I thinl price stabiloity is important and hence why the willmake / absorb exchange losses for a period, evaluate an dthen adjust. When the CHF strengthened it killed many markets.

I am also not convinced that all watches are sold to only UK residents. Bit like Hong Kongin the old days. It was the tourists that bought them..maybe I am wrong...

anyway having been in switzerland last week...i priced the 116655 at Geneva Airport (aftyer duty and discount) and it was GBP 18 000. Retail a bit cheaperthan UK but for me I still get VAT back in the UK so 20% more expensive for me to buy in Switzerland versus the UK..

PP financials are more recent and cover up to Jan 2016 and they actually show a drop in GP% of 3% and an FX loss of GBP 3 mio. That could be a similar indiactor for Rolex

[Mini2]

I'm sure ADs here in the U.K. Wish there is no price rise because it will just make PM even harder to sell as well as other not sort afte pieces

Weak pound has helped many ADs out and limited supply has to.

[AK797]

Originally Posted by Devildog

What I was speculating was that Rolex SA sells to its retail network in CHF Much as a US manufacturer would sell to the rest of the world in Dollars. If the pound is weak, the watches cost more for the UK ndealer network to buy from Rolex SA, but Rolex SA receives the same CHF per unit irrespective of how weak or strong the buyer's currency is at a given time.



It is Neil, for sure

My curiosity got the beter of me and I did some digging. It turns out the Rolex Boutiques in the UK are not owned by Rolex but are franchises, much as the Rolex AD network is. Interesting article here :

http://www.watchpro.com/how-to-becom...chise-partner/

For the UK market, ADs and Boutiques source their stock from a UK registered company (since 1915) called The Rolex Watch Company Limited, a wholy owned subsidiary of Rolex Holding SA.

The Rolex Watch Company Limited is supplied with stock direct from Rolex SA.

It would be fair to assume that Rolex pricing in the UK (at least) will be set by agreement between Rolex SA in Geneva and The Rolex Watch Comany Limited in the UK. Given that Rolex SA supplies to The Rolex Watch Company Limited and not direct to the dealers, then the direct imapact of currency fluctuation would hit The Rolex Watch Company UK Limited, as it is having to pay more per unit when the pound is weak.

As a wholly owned subsidiary, that additional cost will directly imact profit and hence the available shareholder return to Rolex Holding SA. But of course "Rolex" will determine how much of that profit is taken as a dividend and how much is left in reserves. In 2015 The Rolex Watch Company made a net profit after tax of £15.8m, paid a dividend to Rolex Holding SA of £8m and had retained profits on its balance sheet of £107m. So its got room to manoever with currency fluctuations!

The big question is whether the price the dealers pay The Rolex Watch Comany Limited for stock is fixed or floating and where the actual supply restrictions are (if they actually exist)

I doubt we will ever know, but in light of the above, I remain to be convinced that there is a Brexit/currency related supply restriction due to loss of revenues in the UK

You may well, however, be on to something regarding pressure from the other markets

Very interesting stuff, Scott, thanks for that.

I think as Rolex are a conservative company that all the grey market scalping plus the in store issues with annoyed customers over stickers and warranties withheld etc and the general bad publicity are also contributing to Rolex not wanting to supply the UK until the situation stabilises. A firm under Biver, on the hand, would relish in it.

[Deepsea Blue]

Still the same prices in Manchester as they were last week/month

[904VT]

Originally Posted by Devildog

What I was speculating was that Rolex SA sells to its retail network in CHF Much as a US manufacturer would sell to the rest of the world in Dollars. If the pound is weak, the watches cost more for the UK ndealer network to buy from Rolex SA, but Rolex SA receives the same CHF per unit irrespective of how weak or strong the buyer's currency is at a given time.



It is Neil, for sure

My curiosity got the beter of me and I did some digging. It turns out the Rolex Boutiques in the UK are not owned by Rolex but are franchises, much as the Rolex AD network is. Interesting article here :

http://www.watchpro.com/how-to-becom...chise-partner/

For the UK market, ADs and Boutiques source their stock from a UK registered company (since 1915) called The Rolex Watch Company Limited, a wholy owned subsidiary of Rolex Holding SA.

The Rolex Watch Company Limited is supplied with stock direct from Rolex SA.

It would be fair to assume that Rolex pricing in the UK (at least) will be set by agreement between Rolex SA in Geneva and The Rolex Watch Comany Limited in the UK. Given that Rolex SA supplies to The Rolex Watch Company Limited and not direct to the dealers, then the direct imapact of currency fluctuation would hit The Rolex Watch Company UK Limited, as it is having to pay more per unit when the pound is weak.

As a wholly owned subsidiary, that additional cost will directly imact profit and hence the available shareholder return to Rolex Holding SA. But of course "Rolex" will determine how much of that profit is taken as a dividend and how much is left in reserves. In 2015 The Rolex Watch Company made a net profit after tax of £15.8m, paid a dividend to Rolex Holding SA of £8m and had retained profits on its balance sheet of £107m. So its got room to manoever with currency fluctuations!

The big question is whether the price the dealers pay The Rolex Watch Comany Limited for stock is fixed or floating and where the actual supply restrictions are (if they actually exist)

I doubt we will ever know, but in light of the above, I remain to be convinced that there is a Brexit/currency related supply restriction due to loss of revenues in the UK

You may well, however, be on to something regarding pressure from the other markets

This above makes sense. I find it way more likely for the ADs in question to be paying directly to the subsidiary at a fixed rate (otherwise, small local businesses such as ADs, would really be up to the creek without a paddle so to speak with their inability to conduct FX hedging like a multi-national would. In the above scenario Rolex Watch Company (UK) would likely be responsible for any translations back to the parent Rolex SA, rather than the currency burden being placed on an AD.

I don't think the alternative arrangement (floating wholesale price) would be very attractive to any ADs, nor fair or attractive enough to maintain a dealer network from Rolex's perspective. While selling in local currency would be some financial risk for Rolex, selling in Francs could also result in even larger business risk for Rolex not having a viable (functioning in practice rather than appearances of an AD network that doesn't purchase inventory nor carry inventory) distribution network.

The Franc unpegging and Brexit have both not been very kind to you guys in the UK. Hoping things turnaround ASAP

[Analysing You]

I can not see why Rolex would announce the new stainless Steel Sky Dweller at £10,600 and subsequently increase the price before a single dealer in the UK has received the watch. It does not make sense to me, and as I understand it, Rolex do not do knee jerk reactions.

[coolaking]

I don't think that would make any difference - if there's going to be a price increase expect it on the 1st of the month - either August or sometime after...

[AK797]

So no mid-week, mid-month price rise then.

I made a few quid out of Jordan so at least this year's Open wasn't a total bust.

[SamP]

Have skipped to the end of thread without reading all threads.
Yes the price increase is imminent and it's not a correction.
Also did you know...
In some AD's, if you pay for your new Rolex and leave it with them for whatever reason, perhaps to resize etc, the full payment taken is not actually a payment, but a deposit.
This then means if you do not collect the watch within 30 days of the next price increase, when you do eventually collect the watch - you'll have to pay the extra increase in price. EVEN THOUGH YOU PAID IN FULL BEFORE THE PRICE INCREASE!
Yes I know a watch is unlikely to be left with an AD to replicate this scenario but damn.......
Regards

[omx5o]

A strange definition of the word 'imminent'.

[Jaypee]

I recently saw a a pre-owned BLNR in Burlington arcade 10% over retail. I mean, i understand supply and demand, but this was crazy to me.

[A.I.]

My AD has said an imminent price increase in the UK is nonsence.

[kelv_w]

It'll be an imminent price increase when you're on the fence on making a rolex purchase. Just sales tactics

[wb55]

Originally Posted by kelv_w

It'll be an imminent price increase when you're on the fence on making a rolex purchase. Just sales tactics

I was trying on a Milgauss in Westfield one week after the price rise last year and the sales assistant, with a completely straight face, said Rolex were thinking on increasing prices another 10-15% the next week.

[desertyank]

Attention all units; be on the lookout for " Wigan Steve ". Last heard from in a Rolex price prediction thread.

Friends and family on TRF are concerned his source at Rolex may have left him in a lurch. " Wigan Steve " might possibly be found lurking round AD's, and probably harmless.

If located, please notify a moderator.

[coleburns]

Originally Posted by SamP

Have skipped to the end of thread without reading all threads.
Yes the price increase is imminent and it's not a correction.
Also did you know...
In some AD's, if you pay for your new Rolex and leave it with them for whatever reason, perhaps to resize etc, the full payment taken is not actually a payment, but a deposit.
This then means if you do not collect the watch within 30 days of the next price increase, when you do eventually collect the watch - you'll have to pay the extra increase in price. EVEN THOUGH YOU PAID IN FULL BEFORE THE PRICE INCREASE!
Yes I know a watch is unlikely to be left with an AD to replicate this scenario but damn.......
Regards

How is this possible though? I am assuming you'd be given a receipt for a paid item thereby sealing the transaction. How could they possibly justify charging you an additional amount?

Rolex the mafia!

[Mick P]

Chaps

One source of mystery to me is who precisely owns the Boutiques. Are they owned by bonafide businesses or are they owned in someway by Rolex ?

The answer to that could have an impact on pricing.

Also what is the definition of a boutique ?

Regards

Mick

[KarlS]

Guess the OP is waiting at his AD returning the 3 Rokexes he had been sold pending the imminent price increase

[dmash]

Originally Posted by WiganSteve

Don't know a % yet. Will likely find out in the morning. And no, AK797 - I didn't actually read that thread. I'm sure I will find out even more at The Open golf on Sunday in the Rolex Hospitality Suite :-)). However, we may already know by then..

I thank you.

The Hospitality Suite was full of lies!

[Snow-Dweller]

Originally Posted by Mick P

Chaps

One source of mystery to me is who precisely owns the Boutiques. Are they owned by bonafide businesses or are they owned in someway by Rolex ?

The answer to that could have an impact on pricing.

Also what is the definition of a boutique ?

Regards

Mick

My understanding is that Rolex only owns one shop/boutique in the entire world... the one in the centre of Geneva.

[Old Expat Beast]

Originally Posted by Snow-Dweller

My understanding is that Rolex only owns one shop/boutique in the entire world... the one in the centre of Geneva.

Yep. Tried to explain this to Mick before but he wasn't having it. All other Rolex boutiques are run, owned (or rented) by ADs.

I thought that had been made clear after about 80 posts. https://www.rolexforums.com/showthread.php?t=499334