Thousands of Swiss watchmakers are facing an uncertain future from 1 August, when the state-funded furlough program comes to an end.
Employers will have to find a way to pay their salary, or let them go.
The furlough scheme, widely used during the Covid pandemic, was never intended to meet such long-term needs as the ongoing decline in demand for luxury watches.
The industry has been relying heavily on support from the government, which has until now covered 80 per cent of furloughed workers’ salaries.
But a decline in global demand since the second half of 2023 shows little sign of recovery.
Smaller and mid-market brands are feeling the squeeze more than large, high-end brands such as Rolex, Patek Philippe, and may be forced to lay off staff.
Watchmakers avoid permanent job losses wherever possible, because of the difficulties in recruiting skilled workers when demand picks up.
Many watchmaking companies have put workers on short-time working even if they have been able to avoid temporary retrenchments.
Swiss watch exports were down 2.8 per cent by value in 2024, according to the Federation of the Swiss Watch Industry, with sales in China down by almost 26 per cent.
Last September we reported that Girard-Perregaux and Ulysse Nardin, (sold off by the Kering Group), had put 15 per cent of their workforce on short-time working and that 40 companies – mostly tool, machinery or component suppliers – applied for permission to cut their workers’ hours in Jura, one of Switzerland’s 26 cantons.
Sales of watches and jewelry in the US dipped in January, for the first time in well over a year. They were 3.0 per cent less than the previous January, according to the latest figures from the US Department of Commerce.
In addition, revisions to November and December sales figures now show slower growth than originally reported.
Figures based on actual through-the-till transactions, rather than estimates, put sales at +2.6 per cent and +1.5 per cent respectively, rather than the revised figures of +3.0 per cent and +4.0 per cent.
Sales of watches and jewelry had been in positive growth since October 2023, and they peaked last September and October at around 10 per cent. Prior to that they’d been in overall decline since October 2022.
Swiss watch exports slumped in December, with the US suffering its first drop in six months.
Total foreign sales were down 5.4 per cent year-on-year to CHF 2.033bn ($2.23bn) in what the Federation of the Swiss Watch Industry Exports (FHS) said was a “sharp contraction”. It’s the biggest drop since June 2024 (-7.2 per cent).
Sales in China continued their decline (down 19.0 per cent), ditto Hong Kong (down 6.4 per cent). Hong Kong is currently the second biggest market globally for Swiss watches and China is the third.
Exports to the biggest single market, the US, fell by 1.0 per cent during the month, ins spite of the holiday season, following on from a 4.7 per cent increase in November.
Among the top 15 markets, the only ones to show growth during the month were UAE (+0.6 per cent), United Kingdom (+5.8 per cent), Spain (+19.3 per cent) and Australia (+7.2 per cent).
The FHS said it recorded falls in all price segments, with the sharpest decline among watches priced at CHF 200 to CHF 500 ($220 to $550). The CHF 500 to CHF 3,000 ($550 to $3,300) segment held up better, declining by just 1.8 per cent.
Rolex has increased the cost of some watches by up to 8 per cent in response to surging gold prices.
A yellow gold Day-Date with a 40 millimeter black dial now costs $45,809, following a 1 January increase, up from $42,587. And a yellow gold Rolex GMT-Master II is up from $45,100.
Gold prices increased by around 27 per cent during 2024 and currently stand at $2,624 per ounce, after hitting a record high of $2,790 last October.
Prices for watches made of platinum, steel, or other materials have also increased, but generally by no more than 3 per cent.
Rolex, the biggest of all; luxury Swiss watchmakers, traditionally puts its prices up on New Year’s Day.
Meanwhile, prices of second hand Rolex’s fell during 2024 by 4.9 per cent, according to the WatchCharts Overall Watch Market index.
The luxury Swiss watchmaker will sell direct to consumers at the HKRI Taikoo Hui mall, in Shanghai, according to Chinese media reports.
The store will be operated by Bucherer, the long-established watch retailer that was wholly acquired by Rolex last September, and will carry Bucherer branding. No date has been given for its opening
China is the second biggest market for Swiss watches after the US, accounting for $209m of exports in August.
But it is currently intensifying efforts to curb conspicuous extravagance, particularly through a crackdown on social media influencers who flaunt excessive wealth.
In addition overall sales of Swiss watches are suffering, according to the Federation of the Swiss Watch Industry, which describes the outlook for the rest of the year as negative.
Rolex dominates the Swiss watch market, with a share of more than 30 per cent. It has always relied on authorized dealers to manage its Chinese operations.
Watch and jewelry sales in the US picked up significantly in June, with their biggest single monthly increase in two years. The year-on-year increase was 6.2 per cent, according to the latest figures published by the US Department of Commerce. The last time we saw such an increase was in July 2022 (also 6.25 per cent). The trend for the last three months has been of continued growth, but at a slower rate (March 4.5 per cent; April 3.7 per cent; May 3.3 per cent). The rise in sales follows a year or so of almost relentless decline (October 2022 to October 2023). Revisions to figures for April and May by the Bureau of Economic Analysis (BEA) at the US Department of Commerce show sales were higher than initially reported. The year-on-year increase for April was 3.7 per cent (revised up from 2.7 per cent based on actual transactions rather than estimates) and for May it was 3.3 per cent (revised up from 1.4 per cent).
Swiss watch exports recorded a steep decline in March as demand in China and Hong Kong dipped below that of four years ago, during the height of the pandemic.
Shipments of timepieces slid 16% to CHF 2 billion ($2.2 billion) for the month, the Federation of the Swiss Watch Industry reported Thursday. The downturn followed a 3.8% fall in February, the first drop in more than two years, as appetite began to falter in Asia.
“Swiss watch exports recorded a sharp decline in March,” the federation noted. “China and Hong Kong accounted for a particularly high proportion of the trend. China suffered a decline…dropping to a level below that of March 2020, when the sector practically came to a halt in the middle of the month because of the Covid-19 pandemic. Hong Kong…saw a similar change.”
Supply to the US fell 7% to CHF 340.5 million ($374.5 million). In China, the federation’s second-largest market, shipments plunged 42% to CHF 150.2 million ($165.2 million), and in Hong Kong they plummeted 44% to CHF 148.1 million ($162.9 million). In Japan exports saw a 3.5% drop, while they slipped 3.6% in the United Arab Emirates (UAE). Decreases of 15% in Singapore, 13% in the UK and Germany, and 12% in France were closer to the global average, the federation explained.
Timepieces at each price point noted decreases. Watches that cost less than CHF 200 ($220) fell 19%, as did those priced between CHF 200 and CHF 500 ($550). Watches valued at CHF 500 to CHF 3,000 ($3,300) slid 38%, while those worth over CHF 3,000 decreased 10%.
For the first quarter of the year, exports went down 6% to CHF 6.08 billion ($6.69 billion).
On Sunday, the American rapper was photographed in Miami in an eye-catching street-style look that included a Louis Vuitton denim shirt, gray trousers, and multi-colored sneakers.
He upped the ante by wearing sunglasses at night, a chain-link necklace set with colored stones, a pinky ring, and a Rolex Datejust set with dozens of carats of diamonds for extra oomph.
Models like this, which are typically customized after being purchased from an authorized dealer, are coveted and can command up to $45,000.
A closer look at Ross’s eye-catching watch reveals its 41 mm case, which contains a dial that’s been pave-set with diamonds. Datejust signatures including dauphine hour markers, a date window at 3 o’clock, as well as the brand’s name and logo are also front and center.
For a similar model offered at the beloved Atlanta jeweler Ice Box, the case and bracelet require over 19 carats of stones for full coverage, and the dial takes over 5 carats. It’s all tied together with a fully gem-set Jubilee bracelet.
If the flashy timepiece is anything like most Datejust 41 models, it runs on a calibre 3235. The self-winding movement was developed in-house by Rolex, and runs at a frequency of 28,800 vph.
It also features 31 jewels and provides the “Hustlin’” rapper with a 70-hour power reserve. The watch may be the latest show-stopper we’ve seen on Ricky Rozay’s wrists, but it’s far from his only diamond-set piece of wrist candy.
Rolex’s pending acquisition of watch and jewelry retailer Bucherer could fundamentally change the luxury watch industry, according to industry observers.
There’s concern and speculation throughout the industry regarding how the purchase will alter Bucherer’s relationship with its competitors, how it will affect “grey market” watch sales, and how it will influence Rolex’s relationships with its retailer network in the US, UK, and Europe.
In fact, the impact on Watches of Switzerland (WOS), Bucherer’s biggest competitor, was immediate, with its shares on the London Stock Exchange (LSE) plunging nearly 21% on the day after Rolex’s August 24 announcement.
WOS — which numbers more than 200 retail outlets, including 87 mono-brand boutiques — issued a statement on August 25 to reassure investors. Rolex will not have operational involvement in the Bucherer business, it will elect nonexecutive members to Bucherer’s board, and there will be no change to how Rolex allocates products, the retailer said.
Omega, Rolex’s closest competitor, issued a vaguely worded statement congratulating Rolex and Bucherer on the acquisition, pointing out that Omega generated nearly 40% of its sales from its own global network of stores.
“We do not have many points of sale within Bucherer’s stores, nor do we need many. There are also no current plans to increase that number,” the release read. “Naturally, we make regular adaptions and updates within our distribution network. However, our strategy is completely independent of other watch brands and is solely considered around Omega’s own planning.”
Bucherer operates more than 100 stores in Europe, the UK and the US. A total of 53 Bucherer stores distribute Rolex products and 48 offer the Tudor brand, Rolex’s sister company.
Rolex, in its brief statement about the acquisition, tried to assure the industry there would be no dramatic moves.
“Bucherer will keep its name and continue to independently run its business,” Rolex said. “The group’s management team will remain unchanged. The fruitful collaboration between Rolex and the other official retailers in its sales network will remain unchanged.”
Whether Rolex will manage to limit its influence is questionable, particularly in the long term, according to industry observers.
“Some people have faith the company can put up a firewall,” said Brendan Cunningham, professor of economics at Eastern Connecticut State University and founder of horolonomics.com, a website that specializes in the economics of the watch industry. “I don’t know how they are going to work that out. Over time there will be a temptation to do more through that relationship and leverage it a little more.”
“There is no reason Rolex will not push its watches into all 100 [Bucherer] stores,” added Alexander Linz of WatchAdvisor, a YouTube program about watches and the industry. “It won’t be tomorrow, but it will happen.”
In addition, this acquisition will likely allow Rolex to sell its most sought-after watches exclusively through Bucherer stores, Linz continued.
There’s also a belief that the move will affect online retailers of “grey market” watches — authentic goods that are sold through unauthorized sources — with Rolex having more control over its own distribution. Some authorized Rolex retailers give the most coveted Rolex timepieces to grey-market sellers, where they could get much more than the authorized price. Rolex wants to stop this practice.
“If the distribution process is in-house, they will have more tools to determine where their watches are going and to mete out consequences if people are doing what they are not supposed to be doing,” Cunningham observed. “It’s kind of a tough situation for Rolex because it can either cancel the distribution agreement or deal with the reputational impact when it happens. If something like that happens at Bucherer, you can do your own investigation and get rid of people responsible.”
Another area where the Rolex-Bucherer arrangement could provide leverage over other retailers is through used-watch sales. Bucherer was the first retailer to be approved for the Rolex Certified Pre-Owned (CPO) watch program, in which Rolex provides a certificate of authenticity, a two-year warranty and a wax seal tag for an approved pre-owned Rolex.
“The way it used to work is that Bucherer would send pre-owned watches for a once-over and service,” Cunningham explained. “They would charge Bucherer, and Bucherer would add it to the price. These transaction costs don’t have to happen anymore. That could make the Rolex CPO program at Bucherer a stronger competitor for the secondary market.”
One of the main unanswered questions is how this acquisition will affect the long-term relationships with its authorized dealer network. Rolex retailers include large luxury watch chains like WOS, German-based watch and jewelry retailer Wempe, and US luxury jewelry retailer Ben Bridge. However, the majority of its retail partners are independent retailers, many of whom depend on Rolex for a significant portion of their sales and as a way to attract people into their stores.
“I’m sure the authorized retailers are wondering, ‘What does this mean for us?’ I’m assuming those conversations, if they haven’t started already, are going to start soon,” Cunningham pointed out. “At a minimum, it puts folks on notice to have a ready alternative for distribution and maybe it will get some dealers to tighten up their businesses a little bit. Rolex is important to any retailer that has that dealer agreement. I’m sure having Rolex increases foot traffic.”
Watches of Switzerland’s group revenue soared 25% for the full fiscal year as it expanded its store network and demand for luxury timepieces rose.
The UK-based retailer achieved sales of GBP 1.54 billion ($2.02 billion) for the 52 weeks that ended April 30, the company said last week. That amount is a record for the firm and has placed it “significantly ahead” of where it expected to be when it released a long-term strategic plan in 2021, it explained.
Sales grew 10% in the UK and Europe to GBP 890 million ($1.17 billion), driven by the opening of 15 new UK showrooms, as well as its first in Germany. In the US, revenue jumped 52% to GBP 653 million ($855 million), with the company opening six mono-brand shops and a Rolex store. The US now represents 42% of total group revenue, the company noted. The rise was also the result of increased appetite for luxury watches, which continues to outpace supply. Watches of Switzerland’s client registration for timepieces is growing, as is the average selling price per piece, it said.
Profit for the period advanced 21% year on year to GBP 121.8 million ($159.5 million).
“Luxury watch sales grew 28% year on year, representing 87% of group revenue,” said Watches of Switzerland CEO Brian Duffy. “Luxury jewelry sales increased at a more modest 10% in the year, reflecting a tougher macroeconomic backdrop and focus on full-price sales. Following two years of exceptional performance, sales are significantly ahead of plan, by over GBP 200 million [$261.9 million].”
During the year, Watches of Switzerland also opened five shops in Sweden and Denmark, and a boutique in Ireland. In fiscal 2024, it will debut a flagship Rolex store on London’s Old Bond Street and a shop in Manchester, UK, as well as a joint venture with watch brand Audemars Piguet. The company expects revenue of between GBP 1.65 billion ($2.16 billion) and GBP 1.7 billion ($2.23 billion) for the full year.
