After an exceptional growth cycle, there were fears that the British retailer, which distributes brands such as Rolex, Omega, Cartier, Tag Heuer, Patek Philippe, Audemars and Breitling, among others, had reached a plateau from which it would be difficult to rebound.
Two developments came in quick succession to dampen the picture: first, the bubble in luxury watch prices burst after a veritable speculative frenzy; then Rolex decided to buy Bucherer, Watches of Switzerland's Swiss competitor.
The news caused some concern, and quite rightly: Rolex represents over half of Watches of Switzerland's sales. If the manufacturer, which jealously controls its production, were to start controlling its distribution just as jealously, the British brand's business could suffer seriously.
This sword of Damocles remains suspended over its head, although the group insists that it still has a fruitful partnership with Rolex. The major projects currently underway—such as the opening of the Bond Street department store in London and the reconfiguration of stores in the United States—seem to point in this direction.
Expansion in the US has been methodical: in 2018, the country represented a fifth of the British brand's sales; this year, after a further 14% increase across the Atlantic, they accounted for over half of its sales, offsetting stagnation in Europe and the UK.
With the additional acquisitions of the Roberto Coin brand and the watch media specialist Hodinkee, Watches of Switzerland has secured a 7% increase in sales over the last twelve months. However, this will only partially reassure skeptics about its organic growth prospects, especially as free cash flow is no longer growing.
The good news is that the luxury watch market remains stable, both for high-end items and luxury items — i.e., those priced at over 3,000 Swiss francs. Even without the particular euphoria seen in recent years, this resilience offers sustained business volume for the few exclusive distributors in the sector.
With less than 10x its free cash flow, Watches of Switzerland, which has nevertheless doubled its revenue since 2020, could offer watch enthusiasts an opportunity to bet on the sector.
