Watches of Switzerland shares plunge after Rolex buys rival
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The stock of Watches of Switzerland experienced a significant decline of over 25% on Friday following the acquisition of Bucherer, a competing chain, by Rolex, the primary provider of opulent timepieces to the UK retailer.
Rolex's recent undisclosed purchase represents their initial venture into retail, giving rise to apprehensions that the Swiss watchmaker might opt for selling a larger portion of its timepieces directly to customers, potentially sidelining intermediaries like Watches of Switzerland.
WoS, which also sells Omega, Piguet, and Cartier watches, emphasized on Friday that Rolex assured them there would be no alterations in the "methods of assigning products or delivering them" following their conversation with the manufacturer's top executives.
Nonetheless, a few experts cautioned that the agreement might have a significant influence on the British retailer, as Rolex products account for 55 percent of its total earnings.
The stocks experienced a significant drop of 23.5 percent, equivalent to a decrease of 163.5p, and currently stand at 530p during the morning trading session in London. This decline shows a slight recovery from the initial larger losses.
The collaboration between Rolex and Bucherer is expected to have a significant impact on WoS, according to analysts at Peel Hunt. They expressed doubt in the possibility of the two companies continuing to operate separately.
According to both Rolex and WoS, the main reason behind the agreement was the matter of leadership transition. Jörg Bucherer, the 86-year-old grandson of the renowned founder Carl Bucherer, does not have any offspring.
Due to the lack of clarity in leadership, Rolex expressed its desire to protect the steady functioning of one of its vital distribution collaborators.
Experts at RBC Capital Markets appeared less concerned about the effects on WoS, asserting that the decline in its stock value was rooted in "unverified apprehensions".
They observed that the British company held a stake of 7 percent in the worldwide market for Rolex merchandise.
Bucherer operates in 15 establishments across Switzerland, 30 within the United States, with an additional five located in both the United Kingdom and Germany. Furthermore, Bucherer also maintains a presence in France, Austria, and Denmark.
