22 days ago • 2 mins
What’s going on here?
British luxury watch retailer Watches of Switzerland (WoS) reported stylish results on Tuesday.
What does this mean?
WoS’s competition toughened up in August, when Rolex snapped up the brand’s rival Bucherer. Straight away, investors worried that Rolex might hold off on supplying WoS with new watches, choosing to stock the competition’s velvet-lined cabinets instead. But WoS proved that not everything has to be shiny and new: second-hand watches flew off the firm’s shelves between April and October, bringing overall sales for the period 5% higher than the same time last year. What's more, WoS confidently stuck to its forecast of doubling sales and profit by 2028. Investors were won over by a future of preloved sales, sending the company’s shares up nearly 10%.
Why should I care?
For markets: Alternative assets do it beta.
Interest rates call the shots for all sorts of investments, with higher rates weighing asset prices down. Beyond that, though, a handful of assets – think art, jewelry, and watches – are also whipped around by market cycles. They’re known as having “high beta”, which simply means they rise and fall more dramatically than the market as a whole. So sure, watch prices have been slipping since last year, but if interest rates let up and the market changes tack, they could be headed for a recovery worth watching.
The bigger picture: There’s a time and a place.
Luxury accessories are perfect for pulling an outfit together, but they’re far from guaranteed to make you a quick buck. In fact, if you’re looking to resell that pair of Louboutins, it couldn’t really be a worse time. That said, this could be a chance to give your portfolio a makeover for less. European luxury giants like LVMH have seen their stocks dip, and when the economy eventually recovers, they’ll likely make bank from pent-up demand.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.
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