Horological Meandering

In an earnings call today, Swatch Group's President Nick Hayek had to announce really bad news: The watch conglomerate's profits drop by 60% for the first 6 months of 2016 (y-o-y), mainly attributable to dwindling sales in Hong Kong and Europe, particular...  

For a longer time I have been expecting this and I'm afraid that the slide has just started. I have seen the same to happen again and again in other industries: Strengthening mart leading to increasing prices leading to increasing profits leading to incre... 

IMHO (non-exhaustive list): Managers have to be watch lovers who understand what they do and do it with enthusiasm and focus on a sustainable development. Reasonable prices (in Austria i.e. a Rolex DD40 Platinum costs K€ 22 more than the WG version...). G... 

Quality: I'm not sure watches today are inferior in quality than the watches from the 1980's for instance. Steel quality is better, finishing is better in our movements than in former versions (324 from 315 or actual other movements compared the 27-460 et... 

Being greedy in business is normal - it's the name of the game. In watches we reached a level where the prices just like the profit margins are totally insane. Now we will come to a situation that the manufacturers need to cope with that situation. As we ... 

I must sell only three wristwatches ( and not the most expensives ) from my collection to finance the 50% of the price of my Porsche Panamera! It is quite strange and the jump is high from Bmw to Porsche, and gives me a lot of satisfaction, much more, if ... 

for this working class, I think that pricing strategy is just insane. Yes, they will sell you that economists' smoke screen of supply vs demand but ultimately there has to be some kind of value justification. Of course if one is born with money, then by a... 

In a Patek party T.Stern said to me: "it's hard to understand how Rolex can make so great watches with so affordable prices". I agree. Take as an example the new Daytona: how can it be so much cheaper than a AP chronograph, as an example, with an outsourc... 

please enjoy your life, especially the Ferrari. I am contend with just occasional glimpse of the Ferraris or the Pateks in this life

Luck always plays a role but in the end, everything depends on how hard one works. I trust that even nearly every marriage could succeed if both try hard. And nearly everybody can drive on day a Ferrari and wear a Patek if those are the ultimate goals. St... 

boys from Nike sweatshops in Vietnam? Regards D P.S. Thing about marriage I agree completely

They make great watches at even more affordable prices.

I had great experience with the Rolex service, i think your unsatisfactory service is a rare exception. Should not happen nevertheless and I agree the price and wait for the service is not optimal . But more importantly, there is a huge choice of mechanic... 

......however, I would add that the expansion of the EM markets has been in no way a small thing in the demand/supply (imbalance). I would also add that global central banks have been printing money for a number of years now...and with interest rates nega... 

It's easy to see back and understand where we stand now. But the real challenge is to find the right solutions for the future. I'm sure some brands will collapse in a way or another, some will survive stronger than ever. I'm following the market developme... 

.....the printing of money as a solution creates all manner of distortions.

.....if you or I could print money legally, would we use that money to buy government bonds paying zero interest? I think I would use it to buy other stuff!

Thanks for sharing a great point of view. I equally feel time pieces have become way to expensive for mediocre pieces and waves of "limited" editions that are meaningless. I hope a correct will bring some sanity back for the true collectors and future one... 

Profit margins were just insane and unsustainable. In a not so far sector, Apple will know the same trajectory quickly. It is a salutary adjustment even if it will be to the detriment of employees as usual. Do not forget (and it is valid for everything) t... 

... the Asia boom has covered it for a while, but there are limits to luxury products, especially when they are long lasting and all important real innovation took place. Less is more, I believe this would be the way forward. Less new models, better care ... 

Numbers sinking and becoming a buyers market. No silly prices of new watches and no new extra extra insanely prices watches . Evident from the fact that Piaget just launched a polo prices under 10k , Vacheron started a new steel watches line going for sub... 

As I already told here, we are privileged people and, sometimes, we do not keep our feet on the ground. Of course making a splendid watch requires time, investment, qualified people... but profit margins in this industry are too high and finally insane. I... 

The new Overseas line came out with very high prices. I believe the steel chrono retails for nearly 30k. When I bought the previous version, which I still happen to like better, the watch retailed for about 16k which seemed fair. Tony

Entry level of 14k usd...

That same $14k would have bought an 18k gold piece from VC. Now, they remove the gold rotor (only a few grams) from the same movement in the Overseas to make an entry level piece. It's unclear how much of these price changes are due to high costs vs. pric... 

"Profits down" beats the heck out of "losses." At this stage, it's a reality check but not a catastrophe.

We have an adage in Finance about stock markets: "you take stairs when they increase and the elevator when they collapse" Regarding watch industry, I think companies are at a corner today after 15 years of growth. Best wishes Alkiro

It\'s idiotic. A phantom. Nothing can grow forever.

It is just a question of time period but everything is subject to this law. Best wishes Alkiro

The fact that a customer has the power to afford it, it doesn't mean that he's a cow to milk at all. They thought it would have been endless, selling goods like any other form of investment, but doing so they've attracted speculators and not created watch... 

Best wishes Alkiro

and it made me think about the luxury watch secondary market. Bit of a reach I know. The truly few great unique Pateks and Rolexes are the AAA that are used to prop up a lot in the range of middling stuff out there. I do feel sorry for rank file employees... 

but it is also down in profits. Richemont is simultaneously laying off workers; cutting production; and buying back unsold stock from its ADs.

as basically a family business they can afford that. Magnus

Things haven't unraveled yet IMO and they will in due time. It just amazes me what the retail price is on watches these days, especially pieces from the Independents. Talk about sky high and as what Greenspan said "irrational exuberance" about the financi... 

Best, Thomas

He wrote about a higher demand for luxury goods as prices rise. Why? It shows the others in the ultra-high wealth group that you've got money to burn. Who can justify a R. Mille tourbillon ratrappante at over $1.1MM? Watch industry, including independents... 

He wrote about a higher demand for luxury goods as prices rise. Why? It shows the others in the ultra-high wealth group that you've got money to burn. Who can justify a R. Mille tourbillon ratrappante at over $1.1MM? Watch industry, including independents... 

...here at the watch enthusiasts' playground. All of us loves watches, but everyone, even (especially?) the heavy-hitters, express almost a sense of schadenfreude at the industry's comeuppance thus far. We couldn't have what we love without the industry, ... 

I have being saying this for a while, but got flamed in another forum. Like your three points. I have criticized the ever increasing prices, horrible service time, and poor quality (of my Patek). What I got in return was I don\'t know watches, and the wor... 

Its not just the economy that is in play here. Younger folks are clearly not seeing the fascination with watches and all segments are trending towards "smart" watches of some type. Fitbit is very popular here and surprisingly very small for everyone yet p... 

to learn more details as SG will publish them next week. In particular, I would like to see a breakdown of brands, but certainly of market levels, to see where they get hurt most. This then would give indications as the impact of smart devices. Thanks, Ma... 

is how I'd describe the industry. This has happened across all watch brands, regardless. They have had it easy until now, people have been buying their products despite the price rises and poor support. Let's hope they'll see where they have been going wr... 

I think the individual companies and their products begin to lose some character. JerryW

With some veeeeery few exceptions, the collections from the past let's say 3 or 4 years aren't showing anything exceptional. Brands are playing the safe ( and too often boring ) card. Just a different color for the dial, a different metal for the case and... 

Not overly priced, not overly big size, not overly show-off purpose...... Very, watch lovers oriented watches...... Brands now have totally forgotten about us! Sad, sad, sad.....

More than one increase, and big increases, in a year.

But they now offer tremendous value compared to new.

.. the greedy boutiques saw an increase in rich Chinese tourists buying expensive watches as if they were chocolates. Thus higher demand and easier selling without having to negociate about the pprice ;-) ... makes prices easily go up

They go to the boutiques with a list in mind, they ask for the model and the price and they buy / not buy. No room for experience, or conversation about savoir-faire, etc. The problem was luxury brands got used to this type of behaviour, and they have got... 

I've been seeing hard times for over ten years now ... but you have to get used to it ;-)

Same treatment as 10 years ago ... all i ever bought in those 10 years was a Longines for my wife ... untill now, we finally bought her dreamwatch ;-) . Don't think we would have bought it there if we hadn't felt welcome once in those ten years .. i guess... 

A friend of me bought over ten new Rolex with him in one year He also is a lover of vintage cars and his son is a carfreak as well. Filip

.. do you want to pay me an advance yet ?

The latest Longines Railroad watch. It is a great one! Best, Nicolas

I asked him last saturday but with all the fuzz and 20 Rolex watches on the table he forgot ..... and me too :-( ... . Tomorrow i'm in Gent though Fifi

... i could fall for an Airking or Milgauss though ....

.. i always fall ... very deep ;-)

... with an Airking as well ... or better with that latest blue/black bezelled Sub ? Bim

A novelty, but not earth shattering by any means.

Sure some were cool looking but it was the exact movement as the previous 20 limited editions.

ironically Swatch Group and Nicolas Hayek can arguably said to have saved the high horology Swiss watch industry through consolidation... but in general, and especially during "good times" I tend to agree with you.

You make tons of money in the good years to prepare for the bad years. That's how business runs. Sorry for this year, but you had great years for a long time, so what's the big deal?

This article from Magnus is important news, but the way people behave when reading this kind of news (and it is the same in politics or in the stockmarket for instance) is lacking of perspective. Yes prices are very high and I won't deny that of course. B... 

I am quite concerned that the state of the market will make it quite difficult for some of the Independents to stay viable. It will be a pity to see any of them disappear as they have all elevated watchmaking to an art form and put their selves into their... 

Independents will be hit so hard-at least those that have excelled in something. Isn't the old addage that if you can't be number 1, find something to be number 1 at? So you've got the independents who speacialize in skeletonization, those who do moonphas... 

Prices kept going up because people kept buying. But what the brands - such as watch brands which have been in business for centuries - had forgot was that those "new" purchasing power would not stay long. Not that they spent too much, but they are "trave... 

This is actually something I would like (but don\'t think ever will) see: the split in revenue between \'core and repeat collectors\' vs. fleeting customers. Also this figure now vs. the past. Although totally different products, the stats (revenue) for a...