London: The UK’s biggest seller of Rolex watches lost nearly a third of its value on Friday after the Swiss brand bought Bucherer, taking its first major step into retailing.
Watches of Switzerland Group shares fell as much as 30 per cent, wiping out almost 500 million pounds ($629 million) in market capitalization.
Rolex unveiled the surprise move to buy Bucherer late Thursday, prompting analysts to question what the deal means for Watches of Switzerland’s future relationship with the brand. Peel Hunt’s Jonathan Pritchard noted that Rolex accounts for half of the company’s sales, and cut his rating on the stock to hold from buy.
In a statement, Watches of Switzerland said it had received assurances from Rolex management that there “will be no change in product allocation or distribution as a consequence of the acquisition.”
According to the UK retailer, the purchase by Rolex is “the best-judged reaction to the succession challenges of Bucherer,” which was founded by Carl F Bucherer in 1888.
“Rolex will not have operational involvement in the Bucherer business,” it added.
Analysts were still skeptical. “Inevitably the market is debating today the extent to which the news signals a growing risk of a weakening future relevance of Watches of Switzerland to a key supplier for the group,” Jefferies’ James Grzinic wrote in a note.
Peel Hunt’s Pritchard said the concerns “are likely to act as a cloud over the shares for the foreseeable future.”
