We do not get many opportunities to look behind the curtain of Rolex, but reporting rules in the United Kingdom demand that businesses publish their accounts every year, so we can at least see how the company is performing across the pond.
The results are remarkable.
Rolex Watch Company UK sales rose by 13% in the pandemic ravaged financial year of 2020.
In accounts published this morning, the full service UK distributor for Rolex and Tudor in the UK and Ireland, generated sales of £468 million, up from £415 million in 2019.
That implies retail sales of around £800 million.
Remarkably, Rolex Watch Company UK sales have quadrupled in just 10 years and more than doubled since 2016.
This in a year when all of its authorized dealers’ stores were closed for at least three months, depending on where they are in the country, and for a business — in the case of Rolex, but not Tudor — that does not allow its watches to be sold online.
In a strategic report accompanying the accounts, Rolex states that: “The growth in 2020 was due to a combination of factors including improvements in mix, price, volume and a control on the growth of operating costs”.
Operating profit increased by 19% from 70.2 million to £83.2 million.
Impact of covid
The report asserts that “covid-19 has not had a significant impact on the company’s operating activities apart from the ability to sponsor certain sporting events”.
It makes no mention of Rolex receiving any government assistance through the furlough scheme or other measures.
Rolex UK made a one-off donation of £1.7 million to the British Red Cross in 2020 to support their aid campaign during the pandemic, the company reveals.
Covid may not have negatively affected the operations of Rolex Watch Company UK, but it most certainly affected Rolex’s production in Switzerland, where it had to close its manufacturing facilities for three months and is thought to have lost at least a quarter of its annual production.
The pandemic also had a profound affect on Rolex authorized dealers, which managed to sell watches with a higher total value (not necessarily more units) than in the previous year despite being unable to welcome customers to their stores for at least three months of the year and prevented from selling Rolex watches online.
Instead they switched to clienteling through the lock downs, with loyal customers and people on waiting lists contacted to see whether they were in a position to buy.
Many of these sales were for more than just the pieces for which they were on waiting lists.
Customers have been prepared to buy more expensive models in deals to improve their chances of securing the more scarce pieces, which is possibly part of what Rolex describes as “improvements in mix, price and volume”.
If the volume of watches sold increased, it must mean the UK was allocated a higher percentage of global supply than other territories; Hong Kong being the obvious example of a location that imported fewer watches last year.
For the Swiss watch industry as a whole, the value of exports to Hong Kong dropped by CHF 1 billion while the UK was lower by CHF 300,000.
Rolex and Tudor have gained market share in the UK. Not only has the UK operation seen sales rise by 13% in a year when total Swiss watch imports were down by 25%, the business has also outperformed LVMH Watch & Jewellery, which reported UK sales down by 9% in 2020.