Plural Investing's Chris Waller on $WOSG.LN Rolex relationship and secondary luxury watch market

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Oct 17, 2024

Chris Waller, Founder and CIO at Plural Investing, returns to discuss his investment insights on The Watches of Switzerland Group. He reveals what the market overlooks about WOSG's potential and breaks down its intriguing ties with Rolex. The conversation spans Rolex's retailer strategies, including the unique dynamics of their supply chain relationships, and the challenges posed by luxury trends among younger consumers. Waller also explores why Rolex doesn't sell online and the implications of their selective distribution methods.

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INSIGHT

Watches of Switzerland Overview

Watches of Switzerland, a UK-listed company, partners with Rolex and other luxury watch brands.
Its valuation seems compelling, trading at about half its intrinsic value.

INSIGHT

Market Misconceptions

The market misunderstands the Rolex relationship and the impact of the secondary watch market.
Diligence is difficult; Chris Waller gathered data from Reddit comments to assess waiting lists.

INSIGHT

Two-Sided Business

Watches of Switzerland's business can be split: Rolex (60% of revenue) and traditional retail (40%).
The Rolex side has distinct qualities, like customer waitlists and no inventory risk.

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Chris Waller, Founder and CIO at Plural Investing, joins the podcast for the second time to discuss his thesis on The Watches of Switzerland Group (WOSG.LN), an international retailer of world leading luxury watch brands with a growing complement of luxury jewelry brands.

For more information about Plural Invest, please visit: https://www.pluralinvesting.com/

Plural Investing write up on $WOSG: https://www.pluralinvesting.com/research

Chapters:

[0:00] Introduction + Episode sponsor: Tegus

[2:26] What is The Watches of Switzerland Group and why is it so interesting?

[5:52] What is Chris seeing that the market is missing about $WOSG opportunity?

[8:25] Why is current valuation compelling? Retailer valuations

[12:05] Rolex relationship

[19:54] Margin and Rolex business model / other examples of symbiotic supplier-retailer relations where the retailer makes so much of the profit

[28:29] Multi-brand stores, Rolex dictates where their brand is located in the store

[31:57] Final thoughts on Rolex relationship

[35:06] Why doesn't Rolex sell online

[38:08] Concerns about Rolex brands because of greater production / does Rolex resonate with new generations, brand lasticity

[43:28] How is Rolex advertised these days

[45:28] How does Chris think about the growth algorithm for the company / bridging the gap between $WOSG opening new stores and most Rolex watches bought at mom-and-pops that are shutting down

[50:14] Why shouldn't this be owned by PE

[54:00] Capital allocation

[57:15] Any additional risks / misconception about Chinese tourism with Rolex

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