Cartier owner destroys more than £400m of watches in two years

[Phil G]

Story here.


https://www.theguardian.com/busines...m-of-watches-in-two-years-amid-buyback-policy

 

[nalomb]

I wonder if that is the retail value or the actual costs of goods? My bet would be the former and if we say there is a 500% markup on watches from the manufacturer, then that's £80MM in product that was recycled with a depreciated loss of say £40MM or just over 2.2% of £1.8BN in gross revenues. But wait! This was done over two years, so using the high end of £278MM in bought back inventory, that actually (using our markup and depreciation schedule) equates to a 1.54% hit.

 

[JOP]

In the name of their work, did you believe that those watches will be destroyed? i can not.
I think that will be redirected to big dealers in cities like Astana etc.

 

[bobandshawn]

Repurposed. I guess they just took their ball and went home...

 

[Genera74]

I wonder if that is the retail value or the actual costs of goods? My bet would be the former and if we say there is a 500% markup on watches from the manufacturer, then that's £80MM in product that was recycled with a depreciated loss of say £40MM or just over 2.2% of £1.8BN in gross revenues. But wait! This was done over two years, so using the high end of £278MM in bought back inventory, that actually (using our markup and depreciation schedule) equates to a 1.54% hit.

My guess it should be retail value

 

[nalomb]

So if our guesstimations are correct, the actual loss to Richemont is little more than a rounding error.


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[M_Hall]

Destroying stock is not unusual for luxury brands as it’s seen as a way of brand protection.

https://www.google.co.uk/amp/s/www.bbc.co.uk/news/amp/business-44885983

I had not heard of watch companies doing it though, sounds like they maybe got a bit greedy and flooded the Asian market a little too much.

Such a shame, I’m not a huge Cartier lover but I’d have taken a heavily reduced Santos.

Thanks for sharing.


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[mrjoe]

I think the article said the watches were dismantled and recycled..so they arent really 'destroyed'

 

[nalomb]

^^ Correct — but for accounting purposes (and ultimately as a valuation and performance index of the company), they have to go somewhere on their books ...

The depreciation schedule or accrual method poses some interesting options ...


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