The luxury watch market was shaken by the news that Rolex, the world's most famous watchmaker, had bought Bucherer, the world's largest luxury watch retailer, for an undisclosed amount. The deal, announced on Thursday, August 24, 2023, sent the shares of Watches of Switzerland Group (WOSG), one of Rolex's main distributors, tumbling by almost 30% on Friday, August 25, 2023, marking the biggest one-day drop in its history.
Rolex said the acquisition was motivated by its desire to preserve the legacy and partnership of Bucher, which was founded in 1888 and has selling Rolex watches since 1924. Bucherer owns more than 100 sales outlets worldwide, of which 53 distribute the Rolex brand and 48 distribute the Tudor brand, a subsidiary of Rolex. Bucherer will retain its name and brand and operate independently from Rolex, with no operational involvement by the Swiss watchmaker.
Watches of Switzerland Group, which was founded in 1924 and operates more than 140 stores in the UK and the US, said in a statement that Rolex had confirmed that there will be no change in the product allocation or distribution processes as a result of the acquisition. WORSG also said that the deal was not a strategic move by Rolex into retail, but rather a solution to the succession challenges of Bucherer, whose owner Jorg Bucherer had no direct descendants to take over the business.
However, analysts and investors were not convinced by WOSG's reassurances, as they feared that Bucherer would gain an edge over its competitors in securing the supply and demand of Rolex watches account for about half of WOSG's sales and are a major driver of its profitability and growth.
Jefferies analysts said in a note that the market was debating the extent to which the news signed a growing risk of a weakening future relevance of WOSG to a key supplier for the group. They also said that the deal raised questions about Rolex's long-term strategy and vision for its distribution network.
WOSG's shares closed at 499p on Friday, down from 681p on Thursday, wiping out more than £600 million from its market value. The shares have lost more than 40% since the start of the year, as WOSG has faced headwinds from the COVID-19 pandemic, supply chain distribution, and rising competition in the luxury watch sector.