Luxury Retail Review: High-end watch sales lag, luxury e-commerce picks up pace


Prices for high-end watches continue to fall, which is another possible bad sign for luxury retailers like LVMH (OTCPK: LVMHF), Richemont (OTCPK: CFRHF) and many others who sell watches directly themselves. flashy watches or rely on high-end consumers willing to splash out on jewelry that makes a splash.

The resale price of luxury watches – which some people buy as an investment – continued to fall over the past week from already lower levels, according to WatchCharts.

WatchCharts reported that the average resale price for luxury watches fell to $18,206 on July 20, down more than 20% from the indicator’s peak in March. The pullback almost entirely wiped out the significant gains that high-end watch prices saw in the first quarter:

Over the past three months, the average Prices for Rolex fell 13.6%, while Patek Phillippes fell 16.4% and Audemars Piguet 11%. Popular models like the Rolex Daytona and Audemars Piguet Royal Oak saw their sale values ​​drop by around $10,000 and $20,000, respectively, within months.

Questions for Cryptography

Bloomberg recently pointed to a possible link between outsized declines in luxury watches and falling crypto prices, as well as the implosion of several crypto exchanges.

However, the correlation has not held since then, with watch prices slipping even further since the recent crypto rebound. Watch values ​​are falling even as Bitcoin (BTC-USD) rebounded around 20% from its recent lows.

Other explanations simply posit that wealthier watch collectors are simply “deeper into luxury territory,” as the New York Times suggests. If true, the declines of previously most popular models would still be justified as fashion tastes dive into more obscure offerings and skew the indexes of the most popular models. Regardless of the answer, the close correlation with crypto and prices and resale prices of the best-known luxury watches seemed to deteriorate over the summer.

The large luxury category is bouncing back

Additionally, the correlation between watch resale prices and broader luxury retail spending has appeared more tenuous in recent months.

Even as watch prices fall, a recent study by Bank of America found that overall luxury spending in Europe rebounded 11% in May and June, reversing the losses of previous months. In fact, the bank cited the luxury and beauty segments as the only two online retail sectors that saw a re-acceleration in early summer.

Bank of America found similar results in America. “In the US, our tracker for online luxury goods accelerated year-over-year, turning positive,” BofA analysts wrote in their report.

The bank found that U.S. luxury online retailers saw an 8% increase in year-over-year sales in June, compared with flat sales in May. An expected return to tourism should also boost in-store sales for many retailers, especially if China delivers on its promises to allow international travel again.

If this is to materialize, Statista predicts that Chinese tourists will spend $41 billion on luxury items and support the entire luxury retail industry to the same degree as before the COVID-19 pandemic.

At the enterprise level, European luxury e-commerce companies MYT Netherlands (MYTE) Mytheresa and Farfetch (FTCH) saw the biggest increases in app and website usage in early summer, while that Richemont’s private YOOX Net-a-Porter division had the poorest performance. .

Read more about Richemont’s brewing battle with an activist investor here.

Floyd N. Morlan