Wednesday, October 9, 2019

The State of the Rolex Union Report

The State of the Rolex Union Report

The UK Report

When information is scarce, everyone becomes an expert. Here on Jake's Rolex World, we specialize in debunking myths about the most reputable watch company in the world. A year ago, I wrote a story as a follow-up to Jake's "What is going on with Rolex supply" article where I published Rolex revenue and profit in the UK and Ireland.

Rolex’s vow of silence over its financial results makes it near-impossible to get a full picture of the market. But British laws regarding financial transparency give us a rare glimpse into the business of the secretive Swiss giant in the fifth largest economy in the world. And the result makes for fascinating reading. 

On Friday, the Rolex Watch Company Ltd—the UK branch of Rolex S.A.—filed its report with the Companies House, and we got a copy. The small London-based business, which is 100-percent owned by Rolex S.A., employs close to 200 people in the UK, and its main job is to sell all Rolex products to authorized dealers that are in the UK and Ireland. 

Friday's report gave us 2018 financial results, and both revenue and profit have never been higher. Revenue increased by 12% to £367 million in the UK and Ireland in 2018. It's interesting to note that revenue has more than doubled in just four years.

While staffing remained the same, employee cost increased 14%. The report doesn't say whether the cost was due to more pay or benefits for Rolex employees, but one can only surmise. Still, that didn't keep the company from posting a record profit. Profit rose a mind-boggling 33%, to £55.5 million, a rate increase seldom seen in any industry.

Authorized dealers say demand for Rolex watches is hotter than ever. Some are blaming flippers and social media hysteria. The data shown above is the clearest sign of the strong health of the Rolex market in the UK and Ireland despite the uncertainties surrounding Brexit.

Not only 2018 results are record breaking, but both revenue and profit have never stopped increasing year-over-year, at least since 2010, when the data were made available to us. 

Finally, a contributing factor to the strong results among all brands is the popularity of the Rolex professional steel lineup that has led to a shortage of such models at authorized dealers. That shortage has helped push sales of precious metal watches at Rolex, which generate higher revenue and profit margins, but it has also helped stimulate sales in other brands.