Watches of Switzerland (WOSG): Updates on Valuation, Cycle, Growth Runway
Deep dive on results, Rolex, secondary prices, share gains, and acquisitions
Watches of Switzerland (‘WOSG’) is a retailer and partner to Rolex and other luxury watch brands. Rolex only sells through authorized retailers like WOSG, which gives WOSG economics closer to a subsidiary of Rolex than a typical retailer because of lengthy customer waiting lists, no online or price competition, and no inventory risk.
WOSG has around 50% share of all Rolex sales in the UK and 10% share in the US where it is the leader consolidating the industry. Management are competent, experienced, and well incentivized, with CEO Brian Duffy owning around £40mm worth of stock.
Despite this, the company trades on just 11x FCF. I believe intrinsic value in three years will be more than double today’s price.
This update to the 30 page Special Report Hidden Gems Investing published in August 2024 is the result of 59 interviews with watch industry sources over the last two years, and updates on WOSG’s:
Fiscal H1 results and expectations for H2
Risk of being disadvantaged following Rolex’s acquisition of Bucherer
Cyclicality - Waiting lists, secondary market prices, and tariffs
Structural growth through market share gains and acquisitions
Valuation
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