Rolex acquires luxury retailer Bucherer – and Watches of Switzerland sees its share price drop by 20%
- Bucherer is a watch and jewelry retailer with more than 100 outlets worldwide
- Watches of Switzerland Group is a prominent authorized retail partner for Rolex
Shares of Watches of Switzerland Group plummeted Friday after news that Rolex had bought luxury retailer Bucherer.
The announcement of the acquisition raised concerns among investors that Rolex plans to move away from using authorized partners for retail sales in the long term and instead sell directly to wealthy buyers.
Such a deal could make a huge dent in Watches of Switzerland’s business, although the London-based company insisted the deal would not change Rolex’s “processes of product allocation or distribution developments.”
Slump: Shares of Watches of Switzerland Group plummeted Friday after watchmaker Rolex revealed it had bought luxury retailer Bucherer
Bucherer is a watch and jewelery retailer with more than 100 outlets worldwide, including seven in key UK shopping destinations such as Selfridges on Oxford Street and the Royal Opera House in Covent Garden.
The relationship with Rolex goes back nearly a century when Ernst Bucherer, son of founder Carl Friedrich, signed an agreement with Rolex co-founder Hans Wilsdorf to make the company a major retail partner for the watchmaker.
In addition to selling Rolex and Tudor timepieces, the Lausanne-based company also offers an after-sales service center and watch repair shops.
Rolex said Jorg G. Bucherer, nephew of Ernst and grandson of Carl Friedrich, has decided to sell the company for an undisclosed amount to establish a charitable foundation.
It added that the acquisition “was the best solution not only for its own brands, but also for all watch and jewelery partner brands, as well as for all Bucherer Group employees.”
According to Watches of Switzerland, Rolex bosses confirmed that they were not making a “strategic move into retail” and would have no “operational involvement” in the Bucherer business.
But despite this reassurance, Watches from shares of the Switzerland group fell 20 percent, or 140p, to 553.5p just before 3 p.m. on Friday.
Russ Mould, director of investment at AJ Bell, said: ‘There has been a trend among several product manufacturers, including the major athletic shoe companies, to sell directly to consumers.
“This allows them to learn more about customer preferences and make more margin because they can cut out the middleman for these direct sales.
“Imagine this happening with Rolex. Theoretically, it could use Bucherer as a sales channel and not have to deal with other authorized dealers like Watches of Switzerland.”
The revelation of the Bucherer acquisition comes about a fortnight after Watches of Switzerland reported a slight decline in summer sales following a weaker performance in Britain, where trading was impacted by the timing of product deliveries.
Chief executive Brian Duffy has also accused the government’s elimination of VAT-free shopping for driving international tourists away from Britain to other prominent European cities.
Along with hundreds of other leading British business leaders, he supported the Daily Mail’s campaign to abolish the ‘tourist tax’.