Finance
Sales of second-hand Rolex are rising in ‘underdeveloped’ American market
While shares soar to record highs, demand in the luxury watch market remains steady after a boom and bust in 2021-2022. Especially in the US.
Watches of Switzerland, the British jeweler with a growing US retail presence, said last week that US sales were up 14% in the fiscal fourth quarterallowing the retailer to achieve better than expected results.
The company’s shares rose 10% on this news.
Brian Duffy, CEO of Watches of Switzerland, said on a call with analysts that U.S. sales were “particularly strong” and called the U.S. market “underdeveloped.”
David Hurley, deputy CEO and head of Americas at Watches of Switzerland, told Yahoo Finance in an interview that its two retail locations in New York City, a market it only entered in 2019, generated $100 million in revenue last year. The company posted revenues of $880 million in the US during the same period.
A key driver for the company was Rolex sales, particularly through the Certified Pre-owned (CPO) program. The company said total pre-owned and vintage sales – including Rolex CPO – doubled in the fourth quarter of the fiscal year compared to a year ago.
Good results from Watches of Switzerland are accompanied by continued weakness in luxury watch prices, including Rolex. According to data from WatchCharts, which tracks secondary prices for Swiss luxury watches, Rolex prices are down almost 10% about the last year; Overall luxury watch prices have fallen by 12% over the same period.
Luxury watch prices will peak in the spring of 2022.
What is old is new again
Pre-owned watches are now Switzerland’s second largest watch category.
CPO sales also help retailers solve an ongoing problem when it comes to selling Rolex in particular: supply.
Hurley said the Rolex CPO business has been “very successful,” and said that of the company entered the US market last year “100%” helped improve results across the industry.
“It just gives people that extra confidence and will undoubtedly help grow the secondary market as a whole,” Hurley said.
The company told analysts last week that growth in the category was “exponential” and said that by the end of next year, Rolex CPO sales could approach 20% of the company’s sales.
CEO Duffy told analysts that the company “remains pleased with the support we’re getting for the projects we’re doing and what’s happening in the market generally.”
Projects that mainly involve further growth in the American market.
“If you look at the broader watch market, the US is probably the most stable market out there,” Hurley said.
“I think over the last five or six years all the brands have recognized the capacity and ability of the US market to grow. That’s why the retailers are investing, and all the brands are investing in that as well.”
Hurley also noted that retailers like Watches of Switzerland, which are spending heavily on “monoblock” stores — for example, the new standalone Rolex store in Atlanta — are not making these investments without having any idea of “the support we’re going to get from our most important watchmaking partners.”
Suggesting that Watches of Switzerland has an indication of how many units it will receive for sale. Numbers that the company will keep close to the vest.
And as Duffy told analysts, the company’s stance is “never be happy with the allocation” it gets from Rolex, adding, “demand continues to significantly exceed supply.”
Pras Subramanian is a reporter for Yahoo Finance. You can follow him Tweet and further Instagram.
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