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While fears of the global economy grinding to a halt hit mainstream retail spending, the high-end watch industry keeps on ticking along.
The latest data out of Switzerland show that despite a sharp drop in the Chinese market, total exports of Swiss watches in May climbed 14% to $2.1 billion, powered by strong growth in the U.S and Europe.
This sentiment has been echoed by Watches of Switzerland (WSOG.L), the U.K.-based watch and jewelry retailer that has been expanding recently in the U.S. market. Watches of Switzerland is an authorized retailer for massive watch brands like Rolex, Omega, Cartier, and TAG Heuer.
“We had a fantastic end to our fiscal year … we were up 40% for the year,” the company's CEO David Hurley said in an interview with Yahoo Finance. "In our final quarter, which ended at the end of April, we were up 48%; we've carried that strong momentum into the current fiscal year.”
Hurley, who used to head the retailer’s U.S. business, says the biggest opportunity for growth is stateside.
“When we compare [the U.S.] to other luxury group or luxury products, we see that in the luxury leather goods [segment], the market in the U.S. is about six times the size of the U.K., [and] luxury jewelry, about five times. And luxury timepieces, about 2.9 times,” Hurley says. “We still think there's a lot of work to be done.”
Fortunately for Watches of Switzerland, Hurley says the retailer has been operating in a situation where demand is outstripping supply for many of the goods it carries. Hurley says this gives it some visibility into forecasting future performance, because it knows what the supply will be for the year, and presumably most of it will be sold.
The Rolex debate
One watchmaker that dominates any discussion of the industry is Rolex. The giant in the Swiss watch world has been accused of holding back supply to gin up demand, and the opaque nature of its dealer network has led to some frustration among watch collectors.
Rolex told Yahoo Finance last year in a statement that the company doesn’t hold back supply and that maintaining quality was the main concern. “Our current production cannot meet the existing demand in an exhaustive way, at least not without reducing the quality of our watches,” Rolex said at the time.
Hurley echoed that sentiment from the dealer perspective. “For many years, it isn't a post-COVID phenomenon, demand has exceeded supply for Rolex,” Hurley says about the Rolex craze. Though this has meant crimped supplies for dealers, Hurley says at Watches of Switzerland they are “continuing to get a good supply of Rolex timepieces.”
Supply is coming in, though Hurley says its customers still have to wait a little and be patient. At the very least, they will be able to at least try on display models, he says.
And while the wait has frustrated some clients, Hurley is confident the eventual payoff will have them coming back. “[The display models] are great because it allows people to try on these timepieces; [and] we want to keep that dream alive that people can get that timepiece that they want,” Hurley says. “We're in a very fortunate position that we get to make a lot of people very happy, on a daily basis.”
From what Rolex fans are saying online, they generally have been waiting for quite a long time to hear back from authorized dealers.
Watches of Switzerland is wrapping up its fiscal first quarter at the end of the month. Shares of Watches of Switzerland Group (WSOG.L) trading in London are down around 45% year to date.