- Swiss luxury watch maker buys Bucherer
- UK retailer insists deal won’t impact sales
- Insiders say deal could be ‘earth-shattering’
Shares in luxury retailer Watches of Switzerland (WOSG) fell by 27% to 499p, a record one-day move and one which brings share price losses for the year to more than 40%.
The catalyst for the sell-off was news overnight that Swiss luxury watch-maker Rolex had agreed to buy its long-standing retail partner Bucherer, a move which industry insiders say could reshape the market.
WHY IS THE ROLEX DEAL IMPORTANT?
Rolex has just one store in Geneva and has therefore relied on Bucherer with its 100 stores to sell its watches in Switzerland, Europe and the US for almost a century.
Jorg Bucherer, grandson of the chain’s founder, is 86 years old with no descendants, and has sold the retailer in order to set up a charitable foundation.
The question is, why did Rolex buy the business when there are plenty of other more likely buyers such as French luxury giant LVMH (MC:EPA) or even private equity investors?
Rolex maintains Bucherer will remain independent and its management will be unchanged, but industry insiders suggest its strategy will be dictated by the watch-maker from now on.
‘This deal is a huge surprise and has the potential to upend the luxury retail watch market,’ says Bloomberg’s Andy Hoffman.
‘Almost every luxury watch retailer in the world that has Rolex and Tudor will be losing sleep tonight,’ adds Watchpro founder Rob Corder.
WHAT DOES WATCHES OF SWITZERLAND SAY?
The UK retailer issued a statement to say the purchase of Bucherer ‘is not a strategic move into retail by Rolex’ and ‘there will be no operational involvement by Rolex in the Bucherer business’.
It added, ‘There will be no change in the Rolex processes of product allocation or distribution developments as a consequence of this acquisition.’
While that may well be the case in the short term, longer-term the deal could be ‘earth-shattering for the industry’ says Watchpro’s Corder.
‘The apocalyptic version of the future would see Rolex slowly transition its entire global sales into Bucherer, effectively selling direct to consumers and cutting hundreds of authorised dealers worldwide out of the Rolex market.’
Shore Capital’s Elenora Dani and Clive Black issued a research note flagging the limited geographical overlap of Bucherer stores in continental Europe, but questioned the deal’s implications for Watches of Switzerland’s growth plan, particularly in the US where the UK firm owns 47 stores and the Swiss firm has 30 stores.
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