Britain’s biggest Rolex seller urged to move to US
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Britain’s biggest Rolex seller has been urged by an activist investor to consider abandoning its main stock market listing in London and pursue options in the US instead.
Gatemore said Watches of Switzerland’s share price has become “significantly dislocated” from its value because of misconceptions over its exposure to the luxury slowdown.
Gatemore revealed this week that it has taken a stake in Watches of Switzerland, buying 1.9m shares in the London-listed company.
The activist said it was calling for the luxury retailer to move its primary listing to the US, where the markets tend to offer higher valuations which would “more accurately reflect the company’s intrinsic value”.
Shares in the company jumped more than 2pc following Gatemore’s announcement on Wednesday morning.
Liad Meidar, a managing partner at Gatemore, said Watches of Switzerland was a “fundamentally strong business run by a proven management team”.
However, he said it had been affected by the “broader malaise in UK markets”, which has prompted a flurry of London-listed companies to consider shifting their listings to the US.
Figures from Goldman Sachs earlier this year suggested that the UK stock market was shrinking at its fastest pace in history.
Earlier this year, ￡516m was wiped off Watches of Switzerland’s value in a day after it issued a warning over luxury demand amid the cost-of-living crisis. Shares in Watches of Switzerland are down more than a third since the start of the year.
The share price slump in January came as chief executive Brian Duffy said that customers were shifting more of their spending towards fashion and travel, weighing on their appetite for high-end watches.
However, Gatemore said it did not believe that Watches of Switzerland was “significantly affected” by the wider downturn in luxury spending, saying Swiss watch export data suggested that the US and UK markets remain resilient.
Watches of Switzerland, which also sells luxury jewellery made by Cartier and watches by Audemars Piguet, has been growing its business in the US over recent years.
Gatemore said it believed Watches of Switzerland was “now well positioned to unlock additional growth in the massive and underpenetrated US market”.
It follows concerns about spending by tourists in the UK, in the wake of the Government’s decision to axe tax-free shopping for overseas visitors.
Mr Duffy has been among the most vocal luxury chiefs in criticising the decision, and earlier this week signed a letter to Rachel Reeves calling for the policy to be reviewed.
He said: “We are calling for a fresh, objective Government assessment of this important subject as a matter of urgency.”