Key investor sells shares amid Rolex deal

3 mins read

In a calculated manoeuvre reflecting the volatile dynamics of the luxury watch market, a major shareholder in Watches of Switzerland has offloaded a substantial chunk of its holdings. This strategic divestment, amounting to a staggering 5 million shares, comes hot on the heels of the seismic announcement that Rolex, the horological juggernaut, is set to seize control of its rival, Bucherer.

In a regulatory disclosure filed with the London Stock Exchange, Edinburgh-based asset management giant, Abrdn Plc, revealed that it had deftly reduced its stake in Watches of Switzerland from 8.2% to 6.1% mere hours after the blockbuster acquisition unfolded last Thursday.

Rolex, an esteemed emblem of luxury and a barometer for the haute horlogerie industry, threw the market into disarray when it unveiled its audacious foray into retail. This audacious move was met with a tumultuous response, sending Watches of Switzerland shares plummeting by a resounding 21%.

The reverberations of Rolex’s strategic gambit have instigated palpable anxieties within the luxury watch sector. The prospect of Rolex, an industry titan, devouring an even larger slice of the retail pie has cast a shadow over third-party vendors such as Watches of Switzerland, heavily reliant on Rolex, Patek Philippe, and Audemars Piguet for approximately 60% of their sales revenue.

In the midst of this intricate high-stakes chess game, Bucherer, a storied 135-year-old Swiss watch purveyor with a network of over 100 boutiques, stands at the epicentre of transformation. Boasting a portfolio where Rolex products account for more than half of its offerings, Bucherer’s acquisition could potentially catalyse further disruption within the watch market. This may compel other manufacturers to assert greater control over the distribution and sale of their prized creations.

The luxury watch industry, once bedecked with opulence and demand, now finds itself navigating a labyrinth of challenges. Earlier this summer, the prices of marquee timepieces in secondary markets languished at levels not witnessed in two years. Even the affluent strata of consumers have exhibited restraint in their purchases, as they contend with the headwinds generated by higher interest rates and the tapering of consumer expenditure.

In this milieu of intrigue and transformation, the prudent manoeuvring of major stakeholders such as Abrdn Plc underscores the intricacy and volatility of the luxury watch industry, as it grapples with an uncertain future in the wake of Rolex’s audacious power play.