When Rolex made its surprise announcement in August that it had acquired one of the largest watch retailers in the world, Bucherer, there was an immediate impact on Bucherer’s competitors. Watches of Switzerland, Bucherer’s main competitor, instantly lost nearly a quarter of its value as investors worried that a Rolex-owned Bucherer would suck up an inordinate amount of market share in the luxury watch space.
But as Watches of Switzerland’s second-quarter earnings released on Tuesday showed, the company has managed to assuage investors’ fears, for now. After the earnings announcement, which showed strong growth in the U.S. and a renewed focus on resale, shares rose by 14% that day.
Watches of Switzerland reported an 11% year-over-year increase in total watch sales in the U.S. That growth is valuable at a time when other luxury companies are showing slowed growth in the U.S. It’s the second quarter in a row that the U.S. has been a growth area for Watches of Switzerland after a 10% growth in the region last quarter. At the time, growth in the U.S. was a bright spot in the company’s otherwise disappointing quarter. But Watches of Switzerland found an even greater lifeline this quarter in the resale sector, with an 88% increase in pre-owned sales.
Watch resale has continued to grow as a formidable chunk of the entire watch market, which is also booming. New Swiss watches are a $53 billion market, while the pre-owned watch market is worth nearly half that, at $24 billion. It will likely grow to $35 billion by 2026, according to an estimate from Morgan Stanley this month.
Considering the category’s high prices and generally scarce production of new watches, resale is a powerful force. It’s so influential, in fact, that in May, Rolex became the first of the Swiss watch brands to start its own certified pre-owned watch program. It now sells through Bucherer and, more recently, Watches of Switzerland and the newly formed 1916 Company, formerly Watchbox.
“We are encouraged by the early response to the Rolex Certified Pre-Owned program which launched in the U.K. in September, following the U.S. launch in July, as clients react strongly to the authenticity and guarantee of quality that the Certified Pre-Owned seal represents,” said Watches of Switzerland CEO Brian Duffy in a statement.
Other watch brands outside of the luxury sector have also begun to create their own resale channels, like Timex, which launched the Rewound program earlier this year. Additionally, a number of new secondhand watch startups like Wristcheck and Bezel have popped up and expanded in markets like the U.S. and Hong Kong.
But despite the boom in watch resale sales, the sector isn’t without its volatility. Prices have fluctuated wildly over the last year, with prices for secondhand Rolexes dropping significantly. Though that decline has slowed — Rolex prices fell only 2% on the secondhand market in September, compared to a two-year low in July, according to Bloomberg — there will likely still be volatility in the near future.
“It’s a comedown from the last few years where prices were driven up to unreasonable highs by new demand,” said Tim Stracke, CEO of the watch resale platform Chrono24. “Prices dropped a lot last year but have mostly stabilized. We’re seeing around 30,000 transactions a month. … Once prices fully stabilize or hit the trough, we’ll see an even higher level of demand. Right now, some of the sellers are waiting for prices to climb back up a bit.”