Jun 3, 2019

Cashing in on the luxury watch bonanza

Illustration: Aïda Amer/Axios

Leveraged buyout experts Apollo Global Management made the latest move into the red-hot global watch market, taking its Watches of Switzerland brand — an official Rolex retailer that also sells luxury imprints Patek Philippe, Cartier and Longines — public.

Why it matters: Watches of Switzerland's successful IPO shows the skyrocketing popularity of luxury watches is not lost on financial markets. The stock debuted Thursday on the London Stock Exchange at an IPO price of 270 pence (about $3.41) and rose as much as 17%.

  • Its enterprise value is already 5 times what Apollo paid for it in 2012.

What's happening: Demand for luxury watches is soaring and supply is not keeping up, causing a gold rush in the industry. Once shunned, second-hand luxury watches are now the watch industry's secret sauce.

The market has taken off to such a degree that used watches sold online in 2018 regularly fetched higher prices than new ones.

  • "Based on worldwide sales over the past 15 years, we estimate the value of non-worn watches at $500 billion," online watch retailer Watchbox's vice president Patrick Hoffmann said in an August interview.
  • "Potentially then, the pre-owned market could be bigger than the market for new watches."

The block is hot: Luxury goods giant Richemont, owner of Cartier and Jaeger-LeCoultre, is going for broke, investing nearly $3.4 billion in used watch seller Watchfinder and other online vendors last year. They're not alone.

  • Online retail giants like Alibaba, eBay and Amazon are building top-dollar in-house authentication teams as watches sell for more than $100,000.
  • Audemars Piguet said it would launch a second-hand business this year.
  • Breitling's CEO says the company is planning to buy and sell used watches.
  • LVMH, owner of watch brands TAG Heuer, Hublot and Zenith, is reportedly considering entering the market as well.

But, but, but: It's not all good for everyone. Watch sales are slowing in places like Hong Kong and turning negative in the U.K.

  • Richemont's expansion has increased sales but profitability fell to the lowest level this decade. Farfetch's stock sank 11% Thursday after the e-commerce platform reported a wider-than-expected loss.
  • The online luxury business is currently going through an unprofitable investment phase, with some experts saying it's poised to slow.

Still, there are clearly high hopes for what's to come. "It's no longer a hidden secret anymore," Danny Govberg, owner of luxury watch emporium Govberg Jewelers, told Bloomberg last year. "It has a life."

Go deeper: The sign that Apple has ripened

Editor's note: This article has been corrected to show the IPO price of Watches of Switzerland was 270 pence.

Go deeper

World coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Axios Visuals

The European Union is considering an $826 billion coronavirus rescue package to fund recovery efforts for all member states, European Commission President Ursula von der Leyen said Wednesday.

By the numbers: More than 5.6 million people have tested positive for COVID-19 and over 2.3 million have recovered from the virus. Over 355,500 people have died globally. The U.S. has reported the most cases in the world (over 1.6 million from 15.1 million tests).

U.S. coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios. This graphic includes "probable deaths" that New York City began reporting on April 14.

More than 100,000 Americans have died of the coronavirus, according to data from Johns Hopkins — a milestone that puts the death toll far beyond some of the most tragic events in U.S. history.

By the numbers: Over 1.6 million have tested positive in the U.S. Nearly 354,000 Americans have recovered and over 15.1 million tests have been conducted. California became the fourth state with at least 100,000 reported cases of the coronavirus on Wednesday, along with Illinois, New Jersey and New York.

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 10 p.m. ET: 5,690,951 — Total deaths: 355,575 — Total recoveries — 2,350,071Map.
  2. U.S.: Total confirmed cases as of 10 p.m. ET: 1,699,073 — Total deaths: 100,396 — Total recoveries: 391,508 — Total tested: 15,192,481Map.
  3. Public health: CDC issues guidelines for reopening officesFauci says data is "really quite evident" against hydroxychloroquine.
  4. States: California hospitals strained by patients in MexicoTexas Supreme Court blocks mail-in expansion to state voters.
  5. Business: MGM plans to reopen major Las Vegas resorts in June — African American business owners have seen less relief from PPP, Goldman Sachs says.
  6. Tech: AI will help in the pandemic — but it might not be in time for this one.
  7. World: EU proposes a massive pandemic rescue package.
  8. 1 🎶 thing: Local music venues get rocked by coronavirus.
  9. 🎧 Podcast: Trump vs. Twitter ... vs. Trump.
  10. What should I do? When you can be around others after contracting the coronavirus — Traveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  11. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

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Updated 1 min ago - Politics & Policy