Watches of Switzerland Group share price (GBX), last 6 months. (Data: LSEG)
Watches of Switzerland Group (WOSG) last week reported record revenue for the financial year. The U.S. is now the majority of both sales and profit, with U.S. revenue reaching $1.24 billion, up 24% year over year. Chief Executive Officer Brian Duffy called that “a major milestone” achieved eight years after the company entered the U.S. market.
Two months before the results, in March, Coronet highlighted WOSG’s stock potential, arguing that one of the few ways to ride Rolex’s extraordinary performance was through its largest publicly traded retail partner. Since then, WOSG shares have surged more than 50%.
The argument in these pages has been that the U.S. market remains highly fragmented and WOSG is among the few retailers with the resources to consolidate part of Rolex’s network, a model now favored by the brand. Rolex has been consolidating distribution around large, well-capitalized partners capable of investing in multi-million-dollar flagship boutiques, such as WOSG’s new Bond Street location. In the U.S., a similar trend is emerging as mom-and-pop retailers close and supply shifts toward larger partners capable of building dedicated Rolex boutiques. It is still this magazine’s view that WOSG’s expansion runway in the U.S. is underappreciated, even after its latest acquisition, Deutsch & Deutsch in Texas.
While WOSG shares fell in 2023 following Rolex’s announcement it would acquire Bucherer as investors feared the brand would favor its newly owned retailer, that has not materialized. For Rolex, weakening a century-old partnership with WOSG, the largest luxury watch retailer in the U.K., would make little sense, especially as Rolex has shown no interest in acquiring additional retailers, a position confirmed by its CEO last November.
Now that the U.S. represents the majority of both sales and profit, Coronet believes WOSG would do well to move its stock market listing from London to the United States. A U.S. listing could attract more investors, increase analyst coverage and support a higher valuation.