Jean-Frédéric Dufour, CEO of Rolex, has cautioned against treating luxury watches as financial investments. In an interview with Swiss newspaper NZZ last week, Dufour emphasized that equating high-end timepieces with stocks is misleading and potentially harmful.
“Comparing watches to stocks is misguided and dangerous. We create products, not investments,” Dufour remarked, underscoring the company’s commitment to crafting luxury items rather than financial assets.
This warning comes amid a downturn in the secondhand watch market, which has seen prices plummet following a surge during the pandemic. According to WatchCharts’ Overall Market Index, which tracks watch prices, there was a 72% increase from January 2021 to March 2022. However, prices have since dropped by 38%, contrasting with a 13% rise in the S&P 500 index over the same period.
The decline in watch prices is attributed to the Federal Reserve’s interest rate hikes, which began in May 2022. With rates increasing from near-zero to approximately 5% by July 2023, consumer spending on luxury items has diminished, as higher rates incentivize saving over spending.
Dufour, who has led Rolex since 2015, anticipates a “challenging” year ahead. He noted that luxury watchmakers like Rolex, Patek Philippe, and Audemars Piguet face difficulties in adjusting prices to boost demand. “The era of universal prosperity for watch manufacturers is over. In robust economic times, production often exceeds demand. As markets weaken, retailers are pressured to discount, which is detrimental to luxury products,” he explained.
This sentiment is echoed by Patek Philippe Chairman Thierry Stern, who warned last year about a slowdown in the luxury watch market. Patek Philippe, renowned for its coveted Nautilus sports watch, produces between 60,000 and 70,000 watches annually, with prices starting around $30,000.
