And the first shoe drops from the Rolex/Bucherer news

Rolex is 50% of WoS’s sales.

I bet it's even worse than that. How much traffic do you suppose came from folks walking in wanting a Rolex and leaving with something else?

Rolex be like:

No one asked for my opinion, but I think this acquisition is going to be a serious shit show for Rolex. I think the distance from the customers imposed by the ADs is a large part of the reason why customers tolerate the lack of in store stock.

No one asked for my opinion, but I think this acquisition is going to be a serious shit show for Rolex. I think the distance from the customers imposed by the ADs is a large part of the reason why customers tolerate the lack of in store stock.

Swatch Group to buy WoS at fire sale prices.

I jest, but am I really joking?

“You don’t have this watch because Rolex didn’t send you any? Aren’t you guys Rolex?”

Interesting take. Does Rolex actually care about customers though? Maybe just the repeat whales.

This is the right question. But if they only care about the repeat whales....why have a big store footprint in the first place? Why have the hassle of dealing with other brands?

I think Rolex's power is derived from its ubiquity as a sign of luxury. Not just celebrities or royalty, but relatively normal highly accomplished people. If they don't have that....then I don't think their business is nearly as strong because then it competes against the very highest end of the luxury players (Patek, Audemars, VC) who have much more power in that whale market.

It’s a place to capture and up sell whales. I’m no economist but it sounds like a broader strategy at play here where Rolex wants to control all aspects of sales. Think about the Rolex pre-owned program. Next up is raising their prices even more and spinning it as delivering a better more secure customer service environment.

I woke up and read it on Yahoo Finance and it melted my face.

You know, the best explanation for why companies should just focus on what they're already good at I heard from my value investing prof. This was back in the day of Netflix and Blockbuster. Netflix was still sending out DVDs by mail, and were just starting to talk about streaming.

And a classmate said, derisively, "I don't understand why Blockbuster doesn't just shift to mailing DVDs and doing streaming." You know, he said it like...

And the prof was like, "Well, that would be like your mom asking you..."

Companies are good at what they're good at. In the same way you're good at what you're good at, and your brother is good at what he's good at. It's in the DNA. And DNA doesn't change - typically when it does, it ends with the death of the organism, as that's typically called "cancer."

He then went on to talk about why value investors look for management teams who understand deeply what the source of their company's true profitability is, and stick to those core competencies come hell or high water.

This is one of those cases where, I suspect, you have a management team that is losing sight of what makes their company truly profitable. Maybe reaching for a bonus or something? Absolutely nuts.

It’s probably a good time to buy some shares of WoS. they’re a solid business that will recuperate either through a buy out or just naturally after this news cycle ends. In fact i’m going to look into that now…

Here's the official statement from WoS (if anyone is interested):

25 August 2023

Watches of Switzerland Group PLC

The Watches of Switzerland notes the announcement of the acquisition of Rolex SA of Bucherer SA and comments as follows:

 Bucherer is a long-standing retail partner of Rolex, one of the largest globally (alongside The Watches of Switzerland Group) and the major retailer in the important Swiss market.  Mr Jorg G Bucherer is 86 years old and is the grandson of the founder Carl F Bucherer.  The co-operation and partnership between Hans Wilsdorf, the founder of Rolex and Carl F Bucherer is chronicled in the official Rolex history (from 1924).

Mr Bucherer has no family succession and his wishes are to form a legacy foundation with the proceeds of this transaction.

·     This is not a strategic move into retail by Rolex.  This is the best-judged reaction to the succession challenges of Bucherer SA.

·     There will be no operational involvement by Rolex in the Bucherer business.

·     Rolex will appoint non-executive Board members.

·    There will be no change in the Rolex processes of product allocation or distribution developments as a consequence of this acquisition.

All of the above is reviewed and confirmed by the highest level of Rolex management at Rolex HQ in Geneve and locally in the UK and US.

“We congratulate Rolex on this purchase, which was absolutely predictable and is also in the interest of the Swiss watch industry”

Full statement here: https://www.watchpro.com/swatch-group-welcomes-rolex-acquisition-of-bucherer/

Sometimes when you play too hard to get...some folks give up on wanting you.

For me? I'm never standing in line or waiting for anything. The latest I-Phone, a Disneyland ride, a Rolex etc., etc..

Predictable? Just like how they predicted they would have millions of over produced watches sitting on retailer's shelves and they had to buy those back? How they don't have the slightest idea what customers really wanted? Over the years I have come to realize non of these so called industry experts had any pulse on the business at all, they just needed to hit the quarterly quotas, just a bunch of short sighted business execs who probably don't even have a passion for watches. Predict? Yeah right, they can't even predict what they are having for lunch. 😂

Wow!

This whole thread is fascinating reading, cheers @Edge168n @Mr.Dee.Bater @celinesimon and all who've contributed to the convo.

If you subbed in almost any other company names, I'd fall asleep faster than if I was on a Propofol drip. But instead you had my rapt attention. Succession 2 - 'the watch families'.

Thanks for explaining all the intrigue everyone!

Great discussion.

I wonder now if owners of vintage Bucherer watches will now try to sell them as Rolex the way every cheap Vantage is a "Hamilton"?

I don't know how worried or excited I can really get. I mean sure the market is going to react somehow, as it did, but I'm quite confident that it's all purely speculation and for all we know WoS may be just fine in the end.

I equally know f@ck all (obviously) but I don't think much is going to change in the foreseeable future. Rolex doesn't strike me as the sort of company to implement change quickly, they may be unstoppable but move like a tectonic plate, i.e. very slowly. Hell, it might have been a buy just to make sure nothing much changes. If I was them I would let Bucherer do as they have and just keep an eye out that no funny business is going on and that watches actually reach customers quickly which is probably easier if you own the thing. Sooner or later "getting the call" won't be as cool and people will move on, big time. And of course be ready when the time comes to make a bigger move.

Bucherer was already entangled with Rolex in all sorts of ways and probably their biggest client, no? With new ownership comes uncertainty, that is unless you become the new ownership. And it fits nicely with the long term goal of taking over the watch world (and eventually the actual world I suppose 😜).

I mean, none of us know anything but this feels consistent with two things that Rolex has done forever.

1. Rolex wants to control their retail experiences more. I've heard tales about how authorized dealers have lost allocations and Rolex concessions when they designed a shop window poorly. Woe betide any AD who puts Omega (or even jewelery) in the same show window as a Rolex.

2. Rolex wants to capture more value from their watches

I don't know how that doesn't result in either long term reduces allocations to competitor chains OR decreased margins on those allocations.

One man's opinion.