Amidst soaring stock market indices, the luxury watch sector, particularly in the US, is witnessing a stabilizing trend following a tumultuous period in 2021-22.
Watches of Switzerland, the esteemed UK-based jeweler expanding its footprint in the US, revealed a remarkable 14% surge in its US sales during its fiscal fourth quarter, surpassing market expectations and triggering a 10% uptick in its shares.
CEO Brian Duffy attributed the robust performance to the US market’s vigor, which he described as “particularly strong” and “underdeveloped” during an analyst call. David Hurley, deputy CEO and head of Americas, further elaborated on the company’s success, highlighting the impressive $100 million revenue generated by its two New York City retail outlets in the past year alone, contributing to the overall US sales tally of $880 million for the same period.
A pivotal factor in Watches of Switzerland’s ascendancy has been the buoyant demand for Rolex timepieces, notably from its certified pre-owned (CPO) program. The company disclosed that its pre-owned and vintage revenue, including Rolex CPO, doubled in its fiscal fourth quarter compared to the previous year.
This positive performance coincides with a broader softening in luxury watch prices, including Rolex, with data from WatchCharts indicating a nearly 10% decrease in Rolex prices and a 12% decline in overall luxury watch prices over the past year, following a peak in spring 2022.
With pre-owned watches now constituting the company’s second-largest category, the Rolex CPO program has emerged as a key driver, addressing perennial supply challenges associated with Rolex sales. Hurley emphasized the success of the Rolex CPO business and its role in stimulating growth within the secondary market, projecting that Rolex CPO sales could comprise up to 20% of the company’s revenue by the end of next year.
Duffy underscored the company’s satisfaction with ongoing projects and market dynamics, particularly highlighting the continued expansion in the US market. He emphasized the stability of the US market and the strategic investments made by retailers like Watches of Switzerland, such as the establishment of dedicated Rolex stores, as indicative of sustained growth potential.
Hurley echoed these sentiments, emphasizing the symbiotic relationship between retailers and timepiece partners, with investments in flagship stores reflecting confidence in forthcoming product allocations. However, he maintained a cautious stance regarding Rolex supply, acknowledging persistent demand-supply disparities.
In essence, Watches of Switzerland’s resounding success in the US market underscores not only the brand’s adept navigation of industry dynamics but also the enduring allure of luxury timepieces, particularly in the realm of pre-owned offerings, as consumers seek both value and prestige in their watch purchases.
