Rolex is upending the world of luxury watch retailing by buying Bucherer in a deal that gives the Swiss brand a major presence in consumer sales for the first time.
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A move that could have long-term consequences for rival retailers, the world's largest luxury watchmaker will now control Bucherer's more than 100 stores globally.
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Although the boutiques will continue to operate independently, keep the Bucherer name and sell other watch brands, the move raised investors' concerns about a possible squeeze on supply to other stores. Shares of Watches of Switzerland Group, the biggest Rolex dealer in the UK, lost more than a quarter of their value on the news on Friday.
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The purchase is a logical step for two businesses that have had a very close relationship since 1924, according to Jean-Philippe Bertschy, an analyst at Vontobel who estimated Bucherer has an enterprise value of about 4 billion Swiss francs ($4.5 billion). The companies didn't disclose financial terms.
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Rolex said the decision to buy Bucherer was made after the family controlling the retailer decided to sell, and it said relationships with existing retail partners won't change.
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Still, it marks a strategic shift for the biggest Swiss watch brand, which has long said it wouldn't sell its watches directly to consumers.
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There's currently only one store in the world owned and operated by Rolex, in its home city of Geneva. The Bucherer deal will give the brand a direct line to its customers and more control and oversight for distribution, allocations as well as pricing for pre-owned timepieces.
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Rolex entered the used market last year with a surprise move to certify its pre-owned timepieces through retailers like Bucherer.
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Watches of Switzerland was given a heads up by Rolex on the announcement beforehand as well as assurances that the system that Rolex uses for allocations of product wouldn't be altered, CEO Brian Duffy said.
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Demand for Rolex's most popular models, such as the Daytona, GMT and Submariner dive watch, far outstrips supply even though the company makes more than 1 million timepieces per year and generates more than 9 billion francs in sales.
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The Bucherer acquisition marks the second significant shift in retail strategy for Rolex in less than a year. The company unveiled a program in December to issue certificates of authenticity for its used watches that are sold at authorized dealers, including Bucherer.
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