The UK's Leading Rolex Retailer Eyes Potential Move to New York Amid Investor Pressure

In a bold proposal, activist investor Gatemore Capital Management has urged Watches of Switzerland (WOSG), the UK’s largest Rolex distributor, to consider relocating its primary stock listing from London to New York. This recommendation, centered on maximizing value and expanding investor access, aligns with the company’s growing footprint in the US luxury watch market.

Gatemore’s case hinges on the company’s evolving revenue landscape: while Watches of Switzerland’s earnings were evenly split last year—55% from the UK and Europe, and 45% from the US—the firm anticipates a shift to a 60:40 ratio favoring US revenue by 2028. The investor argues that a New York listing could better capitalize on this growth trajectory and tap into the robust liquidity of American markets, where stocks in the Russell 2000 index enjoy significantly higher valuation multiples—averaging 25.4 times earnings versus the FTSE 250’s 11.9 times.

Emphasizing its vested interest, Gatemore recently disclosed an economic interest in 1.9 million shares of Watches of Switzerland, constituting about 0.8% of the company’s total shares. Alongside the proposed listing move, the firm has also advocated for a substantial share buyback, highlighting the belief that Watches of Switzerland, despite strong management, is undervalued and misunderstood by investors. Part of this misunderstanding, Gatemore claims, stems from the global luxury market’s recent slowdown—largely driven by reduced Chinese demand—a trend that does not impact Watches of Switzerland, given its lack of exposure to China.

Further clouding perceptions, Gatemore cited market misconceptions surrounding Rolex’s acquisition of Bucherer last year, a move that some interpreted as Rolex edging into direct retail. Following a thorough review, however, Gatemore supports Watches of Switzerland's assertion that Rolex’s acquisition was defensive, intended to preserve Swiss heritage rather than alter its retail strategy.

Watches of Switzerland has faced a challenging year in the markets, with shares falling 39% year-to-date following a January profit warning and down 70% from their 2021 peak. While a spokesperson for Watches of Switzerland noted that the company maintains an “open dialogue with all our shareholders,” they declined to comment directly on Gatemore’s proposal.