Watches of Switzerland share price plummets 27 per cent after Rolex deal for Bucherer
Shares in Watches of Switzerland fell over 27 per cent this morning following news that Rolex had bought fine jeweller Bucherer AG.
This morning the luxury watch seller, which deals Rolex timepieces, tried to stave off investor concerns that the acquisition would hinder sales at the company.
“There will be no change in the Rolex processes of product allocation or distribution developments as a consequence of this acquisition,” the company said.
Rolex announced the surprise move to buy Bucherer, one of the world’s biggest watch retailers yesterday.
But the deal has seemed to spark fears among investors that Bucherer will get preferential treatment over fellow dealer Watches of Switzerland.
“Investors seem to fear the tie-up will mean Bucherer gets preferential treatment including better access to the watches that consumers are desperate to buy,” Russ Mould, investment director at AJ Bell, said.
“Watches of Switzerland’s efforts to reassure the market that there will be no change in how Rolex allocates stock have fallen on deaf ears. This is what Rolex might have promised now, but that could easily change in the future.”
“It’s worth noting that Watches of Switzerland has been a favourite stock among many mid-cap fund managers. They will have to look hard at the Bucherer announcement and decide if it radically changes the investment case.”
Watches of Switzerland and the general luxury market has performed well despite the cost of living crisis.
In August, the group reported a slight dip in revenue for the 13 weeks to July 30 dropped to £382m, 2.3 per cent down on the same period last year.
However, it said demand for watches remained robust, and maintained its full-year guidance, expecting annual revenue of somewhere between £1.65bn and £1.7bn.