Rolex CEO Does Not Like Treating Luxury Watches As Stock Investments: 'This Sends The Wrong Message And Is Dangerous'

Jean-Frédéric Dufour, the CEO of Rolex, warned against the trend of treating luxury watches as investments, a practice that has seen a significant uptick during the pandemic.

What Happened: He stated, “I don't like it when people compare watches with stocks. This sends the wrong message and is dangerous.” Dufour voiced his concerns during a conversation with Swiss newspaper NZZ.

Brands like Rolex, Patek Philippe, and Audemars Piguet, the Swiss watch industry leaders, witnessed a price surge for pre-owned watches in 2021 and early 2022. This was largely driven by speculators capitalizing on low interest rates and the rise in cryptocurrency values.

However, the past two years have seen a significant drop in secondary market prices, attributed to weaker economic growth and higher interest rates. The Bloomberg Subdial Watch Index, which monitors the 50 most traded timepieces by value, has declined 40% over this period.

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Dufour, who has led Rolex since 2015, predicts a challenging year for the Swiss watch industry in 2024 due to slowing demand. He also cautioned that smaller watch brands could face up to 15% sales declines.

The CEO also discussed the negative impact of discounts on luxury products like watches, the pressure from the strong Swiss franc, the rising cost of raw materials, and the effect of increased interest rates on consumer spending.

Why It Matters: The trend of treating luxury watches as investments gained momentum with the advent of fractional tokenization of real-world assets. In February, Portuguese company Lympid announced its foray into this space, starting with the Rolex Daytona watch.

Furthermore, a surge in Bitcoin’s value in March was predicted to trigger an upswing in luxury watch prices potentially, mirroring the pattern observed during the cryptocurrency's previous rally in 2021.

These developments underscore the growing interconnection between the luxury watch market and financial trends, a phenomenon that Dufour’s comments caution against.

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