Rolex buys Bucherer

[Karbon74]

Rolex to Buy Bucherer in Major Retail Move for Swiss Giant

The acquisition will allow Rolex to begin widespread sales of its watches in its own stores for the first time.

www.bloomberg.com

They bought the biggest multi-brand retailer. Is this the start of grey market crackdown?

 

[PRS]

To be honest I'm not for a long time in this but, I lately got the feeling because of more and more people gets the "Call"... I heard also people are got their watches from the AD just by walking by... I mean, go in, have your talk and get your watch when you walk out from the store... So the prices goes down for a while and there is no more good profit for the gray market stores, I don't know why they do this business practice, but is definitely has an effect on the market...

Maybe not a crack-down. A crack-down would be fast, I think this will affect other retailers and maybe major dealers and cause them to reposition their business and market strategy... From the other hand gray markets are part of the Rolex game, Rolex without gray market wouldn't Rolex anymore... so why hit the own leg with a huge buying action?...

 

[eBoy]

I see where Rolex is going with this: They have been increasingly canceling their contracts with a lot of smaller ADs lately. And now they bought one of the largest retailers in the world. Bucherer also already operates many of the Rolex boutiques, if I'm not mistaken. They clearly want to consolidate distribution all the way to full corporate control over every single new watch sold, cutting out the gray dealers' main source (smaller ADs). At the same time, Rolex is entering the pre-owned market (the other major gray dealer source). They definitely have a bigger plan with all of that... Not sure if this is a good or bad thing for the end customers.

 

[Karbon74]

I liked the discussion in this video

I agree with most of what they concluded.
The grey market situation got to a point where the Rolex Brand was getting damaged over two generations, ours and our kids. A brand like Rolex thinks in decades. The Bucherer deal gave them a good way to deal with it. Let's not forget they also bought Tourneau.

Yes maybe the watches will get more expensive but they will not get ridiculously expensive as under speculation.

The best at this game of waitlist and qualified offers to buy is Hermes. I can see the same strategy...except that Rolex will probably not go boutique. But they will certainly tighten the number of AD for better control over customer experience. Hermes' offer control is ruthless but noone hates them for it as the process is mostly fair and transparent.

Also yes, Rolex will now get money over the full lifecycle of the watches instead of only first sales and services.

 

[TESLA760]

Maybe I'm wrong, but I don't see it changing anything. You'll always be able to bribe the right people whether Rolex owns the AD or not.

 

[Karbon74]

Maybe I'm wrong, but I don't see it changing anything. You'll always be able to bribe the right people whether Rolex owns the AD or not.

you are right about the bribing as there will always be bad apples.
I do believe however that statistically things will improve as a salaried corp employee of Rolex Group would be less likely to risk it than a random employee of a small one shop AD

 

[TESLA760]

These people aren't paid well. They are easy to put in your pocket.

 

[Feefo]

Whatever the outcome....thank god there's reps....

 

[Horace_Derwent]

Maybe I'm wrong, but I don't see it changing anything. You'll always be able to bribe the right people whether Rolex owns the AD or not.

AS usual, your analysis is spot on.

I read of this news....but really, all this AD, grey market bullshit happens only with certains brands.

Kudos to Rolex, now bigger than ever....but i repeat, all this Resellers,GRay MArket, Ad, 'you can buy this but not that'; 'this has a xxxx years waitingt list'; ....blah

Whatever the outcome....thank god there's reps....

Exactly !!!

 

[TESLA760]

Whatever the outcome....thank god there's reps....

 

[Tim4682]

IMO….

This is simply Rolex taking advantage of Bucherer not having an out and buying a business at an attractive multiple (Rolex has no interest in being in the retail business).

Without an heir to take over the business, Bucherer needs to sell. Who is putting up 8 or 9 figures to buy when Rolex is probably 50%+ of revenue and could cut your business off tomorrow? Theres no way in hell there isnt a change of control clause giving Rolex an out to stop using Bucherer as an AD if Bucherer sells, so any Bucherer buyer would have to pay ALOT to stay an AD. That makes the price untenable because Rolex has all the power. So Rolex is really the only buyer.

Does Rolex suffer if Bucherer says F U and sells to someone else and they lose Bucherer as an AD? Maybe for a quarter, but ultimately the other ADs pick up the slack because buyers are gonna buy Rolex regardless who its from, Rolex loses NOTHING long term (if anything they increased the perceived value of their product by making it harder to get).

Dont feel bad for Bucherer though, hes still walking away with millions, just not as much if Rolex didnt own his ass from day 1. That guy took a massive risk and aligned his business with 1 primary supplier….it worked out and he made millions (probably hundreds of millions over the years), but hes not getting top dollar on the way out…is what it is.

Rolex will buy his retail empire on the cheap after threatening to cut off ties, and then sell it for 10x what they paid, with a guarantee for 10+ or 20+years to sell through the new buyer (something that was happening anyway)

This was the Lufthansa heist all over again…Bucherer just got robbed in front of everyone in broad daylight lol.

Just my opinion though, could be totally wrong.

 

[Feefo]

IMO….

This is simply Rolex taking advantage of Bucherer not having an out and buying a business at an attractive multiple (Rolex has no interest in being in the retail business).

Without an heir to take over the business, Bucherer needs to sell. Who is putting up 8 or 9 figures to buy when Rolex is probably 50%+ of revenue and could cut your business off tomorrow? Theres no way in hell there isnt a change of control clause giving Rolex an out to stop using Bucherer as an AD if Bucherer sells, so any Bucherer buyer would have to pay ALOT to stay an AD. That makes the price untenable because Rolex has all the power. So Rolex is really the only buyer.

Does Rolex suffer if Bucherer says F U and sells to someone else and they lose Bucherer as an AD? Maybe for a quarter, but ultimately the other ADs pick up the slack because buyers are gonna buy Rolex regardless who its from, Rolex loses NOTHING long term (if anything they increased the perceived value of their product by making it harder to get).

Dont feel bad for Bucherer though, hes still walking away with millions, just not as much if Rolex didnt own his ass from day 1. That guy took a massive risk and aligned his business with 1 primary supplier….it worked out and he made millions (probably hundreds of millions over the years), but hes not getting top dollar on the way out…is what it is.

Rolex will buy his retail empire on the cheap after threatening to cut off ties, and then sell it for 10x what they paid, with a guarantee for 10+ or 20+years to sell through the new buyer (something that was happening anyway)

This was the Lufthansa heist all over again…Bucherer just got robbed in front of everyone in broad daylight lol.

Just my opinion though, could be totally wrong.

You make it sound like Bucherer was on the edge of bankruptcy. I had this conversation with the late @Storm. Bucherer has had a relationship with Rolex for almost 100 years. Hans Wilsdorf was Bucherer's godfather, Bucherer is the last living human being that made business with him personally. Don't forget Bucherer#s name and reputation. Rolex also wants to keep a Swiss company Swiss acquiring a friendly family business and a competitive advantage over other brands that use Bucherer as a dealership. That#s also why the swiss cartel office is checking if this competitive advantage is legitimate or not. They won't resell Bucherer, this is inline with their recent strategy, on the contrary, they want to get closer to the final buyers and have control over the whole value chain.

 

[Tim4682]

You make it sound like Bucherer was on the edge of bankruptcy. I had this conversation with the late @Storm. Bucherer has had a relationship with Rolex for almost 100 years. Hans Wilsdorf was Bucherer's godfather, Bucherer is the last living human being that made business with him personally. Don't forget Bucherer#s name and reputation. Rolex also wants to keep a Swiss company Swiss acquiring a friendly family business and a competitive advantage over other brands that use Bucherer as a dealership. That#s also why the swiss cartel office is checking if this competitive advantage is legitimate or not. They won't resell Bucherer, this is inline with their recent strategy, on the contrary, they want to get closer to the final buyers and have control over the whole value chain.

I didnt mean for it to come off like they were on the verge of bankruptcy lol... Im sure Boucherer has had an amazing last decade (and especially last few years with COVID and the run up in prices and demand for Rolex and other brands).

My only point was that when youre a retailer with that much customer concentration, it can be incredibly difficult to sell your business because the buyer coming in will want an assurance from customer (ie Rolex) that they will continue selling through you for A LONG TIME (10-20+ years). Also, as I said, whatever agreement they Rolex and Boucherer had in place to have them as an AD definitely had an out on a change of control. If Rolex was so inclined they could have used all that leverage to get a VERY GOOD deal since they hold all the cards. No one would buy Boucherer at any valuation that he would be happy with (history or not) if Rolex declined to renew the AD contract after the change of control.

I dont know enough about Rolex's strategy, but generally speaking manufacturers dont want to be in the retail business. Retail sucks. The multiples suck, you have a lot of fixed overhead (especially with luxury items where you have stores in incredibly expensive large city shopping districts) to make thin margins (Boucherer margins are higher than average retail, but I would guess nowhere near Rolex's margins so this deal is dilutive), etc.

Seems to me like this was more of a mutually beneficial situation, which is what i failed to accurately convey in my earlier post. Boucherer would have had trouble selling to anyone else (at a reasonable valuation) given Rolex's leverage and Rolex wants a major retailer to stay around and continue selling their product under their terms and inline with their long term goals so they can buy them at a likely very attractive valuation, and later if they decide to exit, could sell to ANYONE (at a much higher valuation) with a guarantee attached to sell through them for 10-20+yrs.

 

[eBoy]

"Boucherer"?

 

[eBoy]

Here's an interesting take on the Bucherer / Rolex deal:

Rolex buys Bucherer

Here are some thoughts on the strategic and financial rationale of the Rolex / Bucherer deal from both sides. Happy to hear your thoughts on it.

www.linkedin.com

 

[Karbon74]

For me, Bucherer sold to a friend.
A way of keeping the business "in the family"
as he had noone to inherit the legacy and he wanted the name to have a bright future.

I am pretty sure also that Rolex gladly paid a premium, and not a discounted rate. Again, that amount of money is nothing to Rolex, and it was a way to thank a friend.

It also happens that it gives Rolex the opportunity to fix the AD and customer experience problems that were damaging their brand. I am convinced that Mr Bucherer is involved in that thinking, and that he will have some sort of advisor role in the Rolex Group. Maybe even join their Board.

It's 100% a sweetheart deal and not a hostile takeover

 

[braqueboots]

I watched a Teddy yt vid on this

 

[JayBee0815]

I watched a Teddy yt vid on this

I love the smell of postwhoring in the morning

 

[Feefo]

I love the smell of postwhoring in the morning

@braqueboots

 

[braqueboots]

I love the smell of postwhoring in the morning

thats not my intention i dont have any friends and finally have some free time rn, so im just trynna chat and be involved