Rolex wants more control of its retail sales — and the move has sent shares of a top luxury watch dealer down 21%

• Rolex is taking over watch retailer Bucherer, giving the luxury giant more control over how its watches are sold, the WSJ reported.
• After the news, shares of Watches of Switzerland tanked 21%.

Rolex is a bellwether for luxury watches, so when the storied brand makes moves, the rest of the market takes notice.

That dynamic was on display Friday as the popular Swiss luxury watch brand expanded its retail operations through a deal to takeover Bucherer, according to a report from the Wall Street Journal — and London-listed shares of Watches of Switzerland crashed 21% on Friday after the news.

Bucherer, a 135-year old watch retailer based in Switzerland, runs more than 100 stores, with more than half selling Rolex products. Rolex has long relied on independent retailers, like Bucherer and Watches of Switzerland, to distribute its goods, but the latest move could disrupt other names in the market.

As the Wall Street Journal pointed out, luxury sellers could be in trouble if Rolex's takeover signals a growing trend of companies adopting greater control of where and how their products are sold.

Watches of Switzerland, for example, has about 60% of its sales coming from Rolex, Patek Philippe, and Audemars Piguet.

It's also possible that Rolex can produce enough supply to furnish its own newly acquired retail shops in addition to other dealers, though the sharp stock plunge Friday signals that investors are spooked anyway.

In any case, the luxury watch market at large has gone through its own downturn in 2023. Prices on secondary markets for top brands hovered near two-year lows this summer, with demand cooling off amid higher interest rates and weaker consumer spending.