SDC Weekly 45; Water Resistance; Atomic Habits
SDC Weekly 45; Water Resistance; Atomic Habits
Kelly Yoch moves on, Patek downgrades their watches, Watches & Wonders ending, Grilled Cheese and more Watch Auctions.
How are UK retail sales doing in the watch world? Do you have good watch habits? Is water resistance important?
Hello 👋 and welcome back to the SDC Weekly. Today, you’ll find answers to the questions posed above, and you can catch up on the older editions of SDC Weekly here.
Small stuff
Kelly Yoch moves again
Per this Instagram post - Kelly Yoch has left Watches of Switzerland to join John Reardon at Collectability as a Personal Curator. I suppose this can be seen as a ‘growth move’ from John, as he hopes Kelly will have a handy black book of high net worth clients who she can place John’s pieces with.
Kelly was previously a Senior Patek Philippe Consultant within the Tiffany Store on 5th Avenue in NYC for 12 years (?), and was the person to butter up, if you wanted a Tiffany stamped Patek. Rumour has it, she was scheduled to speak at a Horological Society of New York event about the history of the relationship between Patek Philippe and Tiffany - but Patek told her she can’t do the talk… and this disagreement is what led to her departure. Doubt she will ever read this, but happy to be corrected if this is false!
After leaving Patek/Tiffany, Kelly joined Watches of Switzerland as the group’s client relations director and I imagine WoS had the same goals for her, as John Reardon will now have. Collectability does seem like a better fit, since it is a more intimate role than the one at WoS. Hope it works out for them!
Miss Tweed: Tough times ahead
In their (her?) recent post, Miss Tweed delves into the current trials and tribulations of the watch industry, painting a picture of a gloomy economic landscape. With demand in China falling faster than sand through an hourglass and European consumers’ morale as low as Lange’s customer service ratings… it seems the industry is in for a rough ride.
Miss Tweed’s post basically echoes the MS Report I summarised last week (link below) - most ‘group brands’ (Richemont, Swatch) have been hit by the market slowdown, while brands not tied to big groups (Rolex, AP , Patek, RM) are holding their own. I suppose brand power is becoming clear now - as these brands have increased production and faced a slight decline in demand, their timepieces have become more readily available, which has impacted the demand for weaker brands.
My opinion based on this article as well as all the recent market reporting, is production surplus will be the story of 2024… and I would forecast a major industry contraction going into 2025 - this could well lead to consolidation, with smaller players being absorbed by the groups, or simply closing their doors altogether.
Then there’s Breitling, a brand which has enjoyed exceptional growth under the leadership of CEO Georges Kern. This is something we’ve discussed before in several market report summaries, and Miss Tweed echoes the sentiment. Their decline in volume has so far been offset by price increases - Morgan Stanley called this the premiumisation strategy being adopted by several others (with less success than Breitling). Per the Morgan Stanley report, the strength of the Swiss franc also causes Breitling’s revenues from the U.S. (its biggest market) to take a hit when converted to Swiss francs… On that note, Breitling just opened a new flagship boutique in Leeds of all places - curious choice!
UK Retail sales
The UK’s Office for National Statistics (ONS) data reveals that watch and jewellery retail sales at Large Business retailers (100+ employees or £60m+ annual turnover) have outperformed Small Business retailers (<100 employees) over the past four years. In 2023, Large Business retailers reported a 13% increase compared to pre-pandemic 2019, while Small Business retailers were still below 2019 levels (base index level of 97).
The pandemic hit both types of retailers hard in 2020, with sales dropping to index 79 (down 21% from 2019). However, Large Business retailers recovered better, reaching 115 on the index in 2022, while Small Business retailers remained stable at 2019 levels. In 2023, amid economic challenges, Small Business retailers’ sales declined (index 97), while Large Business retailers maintained a higher level (index 113), now representing 56% of the market’s retail sales (up from 52% in 2019).
Among the major players, Beaverbrooks appears to be the best performing, with record sales of £225m (index 157) for the period from March 2022 to February 2023. The Watches of Switzerland Group also outperformed, with an index of 151 in its financial year ended 30 April 2023 compared to pre-pandemic levels, achieving total UK sales of £890m (10.4% market share, up from 7.5% pre-pandemic). However, both retailers reported slowing sales growth in their current financial years due to economic pressures.
Pragnell’s sales reached £82m (index 148) for the year ended 31 May 2023, slightly lower than the previous year (index 152) due to challenging conditions. Boodles’ turnover soared to £106m (index 138) for the year to February 28, 2023, outperforming peers. Bucherer’s performance was lower than its peers, with an index of 105 for the year ended 31 December 2022.
Signet’s UK operators, H. Samuel and Ernest Jones, saw total sales decrease 10.3% to £344.7m in the fiscal year 2024 (ended January 2024), primarily due to the underperformance of Ernest Jones and heightened inflationary pressure on consumer spending. The Signet subsidiary has been making financial losses from 2021 to 2023, with operating income turning positive in fiscal year 2024 partly due to the sale of 21 prestige watch business stores.
Watches of Switzerland x AHCI
The Watches of Switzerland Group has forged a partnership with the Académie Horlogère des Créateurs Indépendants (AHCI), a collective of over 30 independent watchmakers, to champion the art of independent watchmaking. Starting May 24, the group will advocate for these creative artists, including renowned names like FP Journe, Voutilainen, and Konstantin Chaykin, in the markets they serve.
According to WatchPro: “By becoming a corporate partner, the Watches of Switzerland Groups commitment to the AHCI is to establish meaningful and long-term ties to champion the advocacy of creative and independent watchmaking in the markets the group serves and to contribute to the preservation and the development of watchmaking know-how.”
“We look forward to working in partnership with the AHCI to support the promotion of independent watchmakers, supporting the industry by advocating for it and also engaging our watchmakers by forming relationships with these prestigious artists.”
Eric Macaire, Executive Director of global buying and merchandising at the Watches of Switzerland Group
Sounds like a crock of sh*t from WoS, doesn’t it?
Enough small talk… Let’s dig in.
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🌊 Water Resistance
Patek Philippe seems to be pulling another fast one… That, or the people writing the press material don’t know what the f*ck they are talking about. In the above excerpt from their 2024 W&W Press Release, they explain a new unified standard of water-resistance set at 30 meters. This is unfortunately not as straightforward as it seems.