Investors urge Watches of Switzerland, the UK’s premier Rolex distributor, to transition its primary stock listing from London to the US for enhanced valuation prospects.
- Gatemore, an investor holding 1.9 million shares, highlights a disparity in Watches of Switzerland’s stock value due to misconceptions about luxury market exposure.
- Gatemore proposes the US market offers better valuation conditions for luxury brands, potentially benefiting Watches of Switzerland’s intrinsic value.
- Amidst economic challenges and a luxury demand slowdown, Watches of Switzerland’s shares have dropped over a third this year, yet potential growth is seen in the US market.
- The UK government’s abolishment of tax-free shopping for tourists has spurred debates, with industry leaders including the CEO of Watches of Switzerland urging policy reassessment.
In recent developments, the UK’s leading Rolex vendor, Watches of Switzerland, faces pressure to relocate its primary stock listing to the United States. The push is spearheaded by Gatemore, an investor that has acquired 1.9 million shares of the company. Gatemore asserts that the current market perceptions in the UK have led to a significant underestimation of Watches of Switzerland’s true market value. Consequently, Gatemore suggests relocating the listing might attract higher valuations, aligning more closely with the company’s intrinsic worth.
The US stock market is traditionally viewed as offering more favorable conditions for luxury brands. This perspective is based on the higher valuations typically seen for luxury goods within US markets when compared to London. Following these developments, Watches of Switzerland’s share prices saw a rise exceeding 2% during a recent trading session, signaling market optimism about the potential move.
The retailer has endured a challenging year, witnessing a sharp decline of more than a third in its share value since January. Earlier warnings about a decrease in luxury demand, due to consumers redirecting expenses towards fashion and travel amidst economic pressures, have compounded this situation. Despite these setbacks, Gatemore maintains that the company holds strong fundamentals and remains strategically poised to prosper, particularly within the resilient US luxury market.
Watches of Switzerland also markets other high-end items, including Cartier jewellery and Audemars Piguet watches, and has been strengthening its footprint within the American marketplace. Gatemore is optimistic about the growth opportunities present in what it describes as the “massive and underpenetrated US market.”
A significant concern voiced by the UK luxury sector is the government’s decision to remove tax-free shopping benefits for international visitors, a move believed to potentially curtail tourist spending in Britain. Watches of Switzerland’s CEO, Brian Duffy, alongside other industry leaders, has actively lobbied for a reevaluation of this policy, citing its probable adverse effects on the luxury sector. “We are calling for a fresh, objective Government assessment of this important subject as a matter of urgency,” Duffy emphasizes.
The transition of Watches of Switzerland’s listing to the US could symbolize a strategic shift reflective of broader market trends and valuation strategies.
