Shares in Watches of Switzerland dropped by more than a quarter after Rolex acquired rival chain Bucherer. This acquisition marks a significant move for Rolex, as it is the Swiss manufacturer’s first venture into retail. There are concerns that Rolex may start selling more of its watches directly to consumers, potentially bypassing companies like Watches of Switzerland. However, Watches of Switzerland reassured customers that there would be no change in the distribution processes. Despite this, some analysts believe the deal could have a substantial impact on Watches of Switzerland, as they generate the majority of their revenues from Rolex products.
The shares of Watches of Switzerland fell by 23.5% in morning trading in London, although they recovered from larger early losses. Analysts at Peel Hunt commented that the partnership between Rolex and Bucherer is likely to heavily influence Watches of Switzerland, suggesting that it is unlikely for both companies to remain independent. However, analysts at RBC Capital Markets were more optimistic, stating that the drop in share price was based on unfounded fears. They also noted that Watches of Switzerland has a 7% share of the global market for Rolex products.
The acquisition of Bucherer by Rolex was primarily driven by the issue of management succession. With Jörg Bucherer, the 86-year-old grandson of the founder, having no heirs, Rolex wanted to secure the operational stability of one of its key distribution partners. Bucherer currently operates stores in Switzerland, the US, the UK, and Germany, and has a presence in France, Austria, and Denmark. While the long-term effects of this acquisition are uncertain, it has raised concerns about the future of Watches of Switzerland as a key player in the luxury timepiece market, particularly in relation to Rolex products.
