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

[BNA/LION]

* Watches of Switzerland 3Q US sales disappoint analysts
* Results could be start of slowing demand for luxury watches

ByAndy Hoffman
February 9, 2023 at 1:57 AM PST

"Watches of Switzerland Group Plc, the top Rolex seller in the UK, plunged the most in more than two years as sales of luxury timepieces and jewelery in the US missed analyst forecasts.

The stock dropped as much as 16.5% in London after the company reported weaker-than-expected sales for its fiscal third quarter on Thursday, particularly in the US. The shares pared losses and were down 8.5% as of 11:15 a.m. London time.

The results could be an early warning sign of a potential slowdown in the red-hot luxury watch market that has been driven by US consumers rediscovering luxury mechanical timepieces during the pandemic.

Investors are looking for signs of weakness in the booming sector as US consumers cut down on spending amid higher inflation, slowing economic growth and the collapse of cryptocurrencies. Consumers in the UK are also feeling the pinch from soaring cost of living expenses and a weak economy.

Watches of Switzerland Chief Executive Officer Brian Duffy said that even as waiting lists have swelled, some customers who have been on waiting lists for multiple watches have begun deferring purchases when they got the call that one was available.

“That’s the only thing that we’ve seen,” he said.

Duffy said many of the top brands including, Rolex, Omega, Patek Philippe and Zenith had raised prices since the beginning of the year by an average of about 4%.

Watches of Switzerland reported a 17% increase in sales during the third quarter to £407 million ($494 million), missing the analyst consensus.

Watches of Switzerland is the top retailer of Rolex watches in the UK and one of the biggest vendors in the US.

While demand for new Rolex watches has been strong, prices for second-hand models, which typically trade at a premium to retail prices have been falling sharply after an unprecedented rise in 2021 and the first quarter of 2022.

Rolex launched a certified pre-owned program with authorized dealers for its watches last year that will give the biggest Swiss watch brand a foothold in the used market.

Duffy said Watches of Switzerland was in talks with Rolex to launch sales of certified pre-owned Rolexes at its stores and expects to start selling so-called CPO Rolex watches before the end of the year."


https://www.bloomberg.com/news/artic...nting-us-sales

[R35GTR]

17% YoY growth still seems solid in a weird transition year. Stock dropped because it missed estimates but curious what company guidance was.

Second, the article is implying used watch sales are slowing (since they were trading at absurd values). New watch sales for Rolex will always have more demand than supply.

Seems like a nothing burger

[MJZRolex]

Interesting ... Watches of Switzerland reported a 17% increase in sales during the third quarter to £407 million ($494 million), missing the analyst consensus. Sounds like a healthy increase in sales, which doesn't necessarily equate to making money. Perhaps the deferral of purchases is because the exact watch the customer requested isn't the one that was offered to the customer. I'd be interested to hear from TRF members that didn't make a purchase when contacted.

[Chewbacca]

This post does nothing to help my Rolex investments.

[Oldwoods]

I read a report on this today on Watchpro that stated.

Shore Capital group analyst Eleonora Dani told the Financial Times this morning that the share price move could be explained by “potential softness” in its US jewellery sales, although jewellery makes up only 10% of the group’s revenue.

[Marcjvr]

Originally Posted by Chewbacca

This post does nothing to help my Rolex investments.

[LJubel328]

Originally Posted by R35GTR

17% YoY growth still seems solid in a weird transition year. Stock dropped because it missed estimates but curious what company guidance was.

Second, the article is implying used watch sales are slowing (since they were trading at absurd values). New watch sales for Rolex will always have more demand than supply.

Seems like a nothing burger

I believe this 17% is inclusive of the acquisition spree they went on last year. It’ll be interesting to see how their organic growth plays out in the coming quarters.


Sent from my iPhone using Tapatalk

[EEpro]

Watches aren't going anywhere anytime soon. After this run up they've captured the aspirational interest of a generation like Cadillacs did before.

WoS would be a solid buy at the right price.

[huncho]

Originally Posted by EEpro

Watches aren't going anywhere anytime soon. After this run up they've captured the aspirational interest of a generation like Cadillacs did before.

WoS would be a solid buy at the right price.

that's a dangerous opinion to have here as apparently regression to the mean will 100% happen because historically watches always sold at discounts and the last 4 years was a giant anomaly

(sarcasm as i agree with you)

[DubOhio]

Isn't WoS pink sheet?

[Casey VP-26]

Could it be that all Rolex dealers sales are down because they don't have any Rolex watches to sell?

[Chewbacca]

I just called WOS mountaintop doomsday bunker and Helmut said all’s well. Nothing to be concerned with until they hoard schnapps and schnitzel.

[huncho]

Originally Posted by Casey VP-26

Could it be that all Rolex dealers sales are down because they don't have any Rolex watches to sell?

they sell every watch they get and have had record sales during these times where there are "no watches to sell"

[EEpro]

Originally Posted by DubOhio

Isn't WoS pink sheet?

WOSGF in my Fidelity brokerage. OTC.

[train-time]

Interesting times we live in now. ADs will continue to sell everything that comes in (at MSRP) while the secondary market continues to soften.

The past few years have been great for the ADs and it appears that it will continue for some time with new pieces. It has worked out very well for Rolex.

[SS Oyster]

How can you sell more than Rolex sends you?!?


Sent from my iPhone using Tapatalk

[Ichiran]

Originally Posted by SS Oyster

How can you sell more than Rolex sends you?!?

That's where the CPO comes in.

[Polyesterpig]

Originally Posted by Chewbacca

I just called WOS mountaintop doomsday bunker and Helmut said all’s well. Nothing to be concerned with until they hoard schnapps and schnitzel.

Did somebody say Schnitzel !

[gpeg]

This doesn’t harm the Rolex market or buyers intent but it gives opportunities to other sellers.

[asiparks]

Originally Posted by MJZRolex

Interesting ... Watches of Switzerland reported a 17% increase in sales during the third quarter to £407 million ($494 million), missing the analyst consensus. Sounds like a healthy increase in sales, which doesn't necessarily equate to making money. Perhaps the deferral of purchases is because the exact watch the customer requested isn't the one that was offered to the customer. I'd be interested to hear from TRF members that didn't make a purchase when contacted.

My guess would be that many of the list "buyers" contacted were "investors", only interested in getting a Rolex when the market was climbing and they thought they could flip it it or hold it for quick money.

[SLWoodster]

LOL. Another one to fan the flames of the Lookie Lous out with pitch forks.

Literally we have to go into a real financial crisis and the unemployment rate has to be much much higher.

Try buying something at the rolex store.

[Vince_76]

Originally Posted by huncho

that's a dangerous opinion to have here as apparently regression to the mean will 100% happen because historically watches always sold at discounts and the last 4 years was a giant anomaly

(sarcasm as i agree with you)

SMH. Thought you were better than that given your post history.

Most people (myself included, who started the term “regression to the mean” on here) are smart enough to know that this is no certainty. It’s an opinion, just like yours. And so far, the trend has shown that we’ve been quite right.

Show me a post that says regression to the mean will 100% happen and I’ll show you 3 that claim this without such certainty.

For what it’s worth, WoS has seen a significant slowdown here in NYC (no that doesn’t mean watches in cases… it’s all relative)

[Mr Ben]

Originally Posted by SS Oyster

How can you sell more than Rolex sends you?!?


Sent from my iPhone using Tapatalk

Simple. You get people to buy other crap before you agree to sell them a Rolex.

[huncho]

Originally Posted by Vince_76

SMH. Thought you were better than that given your post history.

Most people (myself included, who started the term “regression to the mean” on here) are smart enough to know that this is no certainty. It’s an opinion, just like yours. And so far, the trend has shown that we’ve been quite right.

Show me a post that says regression to the mean will 100% happen and I’ll show you 3 that claim this without such certainty.

For what it’s worth, WoS has seen a significant slowdown here in NYC (no that doesn’t mean watches in cases… it’s all relative)

there are a lot of posters that are going around with what seems to be 100% certainty that things will go back to how they were instead of just taking it as it goes. i wasn't referring to you with that term but i think you're giving people too much credit. there's a guy that actually compared rolex to harleys in the 80s. it's typical market psychology where people only see 1 direction, people are still waiting for capitulation in the stock market when the nasdaq was down 40% at one point with tons of stocks down 80+%

[Vince_76]

Originally Posted by huncho

there are a lot of posters that are going around with what seems to be 100% certainty that things will go back to how they were instead of just taking it as it goes. i wasn't referring to you with that term but i think you're giving people too much credit. there's a guy that actually compared rolex to harleys in the 80s

Of course. And there’s folks that think prices will rocket back up. The truth is probably somewhere in the middle… but you shouldn’t discredit an argument based on the simple notion that a select few claim it with 100% certainty.

You know I’m vocal on my stance, and yet whenever there’s a discourse among views, I don’t discredit one’s stance by the mere fact that some folks say it will happen. I could post every day saying “I told you so, prices dropped when you said it was going to the moon/rebounding” but what good does that do?

People on here love to pontificate without specific data and evidence.

[mroberts]

WOSGF is extremely illiquid I would not use it as any kind of indicator of the watch industry

[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

[huncho]

Originally Posted by Vince_76

Of course. And there’s folks that think prices will rocket back up. The truth is probably somewhere in the middle… but you shouldn’t discredit an argument based on the simple notion that a select few claim it with 100% certainty.

You know I’m vocal on my stance, and yet whenever there’s a discourse among views, I don’t discredit one’s stance by the mere fact that some folks say it will happen. I could post every day saying “I told you so, prices dropped when you said it was going to the moon/rebounding” but what good does that do?

People on here love to pontificate without specific data and evidence.

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

[beshannon]

Originally Posted by SLWoodster

LOL. Another one to fan the flames of the Lookie Lous out with pitch forks.

Literally we have to go into a real financial crisis and the unemployment rate has to be much much higher.

Try buying something at the rolex store.

Exactly, thanks I get tired of saying this

[MinMay]

All Rolex needs to do is slow production down to increase their value.

They do not want their watch price to be omega range