Watches of Switzerland is under pressure to move its primary listing to the United States following investor concerns.
- Investor Gatemore, now holding a significant stake, is pushing for a US listing, citing better market conditions for luxury brands.
- Recent struggles in the UK luxury market underscore the potential benefits of relocating the listing.
- Despite challenges, Watches of Switzerland shows resilience, highlighted by its continued US market growth.
- The elimination of tax-free shopping in the UK adds to the complexity faced by luxury retailers.
Watches of Switzerland, a prominent luxury retailer, is considering a significant strategic shift. Investor Gatemore has urged the company to move its primary stock listing from London to the United States. This comes after Gatemore acquired 1.9 million shares, pointing to a ‘significant dislocation’ in share price due to misconceptions about the luxury goods slowdown.
The investor believes that the US markets offer more advantageous conditions for luxury brands, potentially leading to higher company valuations. Indeed, following this announcement, the share value of Watches of Switzerland saw an increase of over 2%. Gatemore’s managing partner, Liad Meidar, expressed concerns regarding the ‘broader malaise in UK markets,’ prompting considerations of a US shift among several London-listed firms.
Watches of Switzerland has faced notable setbacks this year, with shares plummeting over a third since January. Earlier warnings in 2023 of reduced luxury demand resulted in a massive £516 million loss in market value. These issues were partly attributed to consumers diverting spending to fashion and travel during the ongoing cost-of-living crisis. Nevertheless, Gatemore remains upbeat about the company’s prospects, particularly in the resilient US luxury market.
Further highlighting its US ambitions, Watches of Switzerland has been expanding its presence in this market. This move aligns with Gatemore’s view of the US as a ‘massive and underpenetrated market.’ The scenario is also complicated by concerns over the UK government’s removal of tax-free shopping for overseas visitors, which many believe may decrease UK tourist spending.
Brian Duffy, CEO of Watches of Switzerland, has been vocal against the UK’s tax changes. He recently joined other luxury leaders in urging the government to revisit its decision on tax-free shopping, describing it as ‘a matter of urgency.’ This lobbying effort underscores the tensions between UK policy and the commercial strategies of high-end retailers.
The potential listing move to the US could redefine Watches of Switzerland’s market strategy amidst ongoing challenges in the UK luxury sector.
