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Openwork: Inside the Watch Industry
The Watch Industry’s Busiest Summer – Geneva Watch Days Preview, Swiss Exports, Plus Richemont Earnings – Episode 48
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- [00:00]
A
A programming note before we begin, today's episode is going to be a little bit shorter than usual. And that's because as you listen to this, we are likely on our way to Switzerland for Geneva Watch Days. And while we are there, we're going to be releasing a number of special episodes. First, at the beginning of the week, we'll fill you in on what's going on in the meeting rooms in Geneva. And then at the end of the week, we'll look back on our favorite watches from the show. So today's episode is going to be a little bit shorter. We're taking a look at a few key timely topics. The first is Geneva Watch Days itself. Yes, the show hasn't even started, but believe me, there is already a ton to talk about. Next, we're going to take a look at July export data for Swiss watches. And then Richemont's latest quarterly earnings report, both of which paint a fascinating picture of what's going on in the industry. And finally, we have an important correction to make. After our last episode, a number of you reached out to us, letting us know that Swatch does not stand for Swisswatch. It actually stands for second Watch. Who knew? And without any further ado, on with the show. This is openwork, a look inside the Watch Industry, a podcast from Collective Horology. I'm Gabe Riley, co founder of Collective.
- [01:13]
B
And I'm Asher Rapkin, co founder of Collective. Collective Horology is an independent watch retailer based in Southern California. We carry a wide range of independent brands including Singer, Reimagined, Renault, tca, Fierce and More. To learn more about us and check out our available inventory, visit collective horology.com now.
- [01:31]
A
Singer, Reimagined, Renault, TCA Fears and more. More of them. They're all exhibiting at Geneva Watch Days. We're going to talk about Geneva Watch Days shortly. But those aren't the only things that are happening@collective horology.com Asher, did you know that there's more stuff happening?
- [01:48]
B
Yeah, I know because you've been messaging me incessantly on it about Slack. Would you like to tell everyone else or should we just slack the community?
- [01:55]
A
Yeah. So we just launched the Collective Mer store. Now we have gotten requests from people for merch for years for a number of reasons. In the past we've done some limited edition merch either in support of collaborative watches that we've done. So we've done things that have been tied to tied to those projects. We've also done merch as like client gifts. So for as A way of saying, you know, thanks to people for any number of reasons. We've developed some, some merch that's gotten out there into the world, whether that those were hats or water bottles or things like that. And we've had people email, message us on Instagram and things like that looking for the stuff. And then we've had people who listen to the podcast who have been saying, you know, I want to find a way to support you guys. And of course, look, the podcast is free. It will always be free. We're not going to charge people to listen to this. We believe strongly in that. It's been a really helpful channel for us to be able to talk with you guys, and it's been very helpful to our business and that's all that we can ask. But there are people who have said, look, I'd love to support you guys and ultimately buy a watch, but is there something else I can do do? And the answer is, if there's another way in which you wanted to support us, you can do that through the merch store. And of course, you don't have to do it at all. You can just enjoy the podcast. But on the merch store, we've got some, some cool stuff. So we have T shirts, we have hoodies, we have sweatshirts, we have drink wear. Some of my personal favorites are the independent watchmaking Metal Tea. So if you're a fan of, okay, if you're a fan of, of heavy metal T shirts, that might be up your alley. And then we've also got the Horology University tea. So if you've ever seen the movie Animal House College, you'll, you'll, you'll get the joke. And there's a bunch of other stuff. There's some open work swag on there as well. And there's some collective merch and some cool color. So if you're curious to check it out, it's collective horology.com merch. On to the podcast. Asher. We have not one, not two, but three things to talk about today. So this is going to be a slightly different format from what we we usually to talk about Geneva watch Days. Obviously, that is upcoming. By the time this show airs, we will be on a plane on our way to Geneva. Typically, we would wait until Geneva watch days to talk about Geneva watch days, but not this year. There's a lot to chat about before the show even, even starts. The second thing we're going to talk about is July export data. It just came out. It is fascinating. It tells an Interesting story about what's going on in the watch industry with regard to watch shipments to the US and around the world. And then related to that, Richemont also just released their Q1 2026. So they're in their 2026 financial year now. It's one of those confusing things. And they just released the data for the first quarter of their financial year. And it tells a really interesting story, not just about what's going on with the big brands and the holding companies in general, but what's going on specifically with Richemont's watchmaking division. And there's a lot to discuss there. So we're going to tackle those three topics today. Asher, are you ready and are you ready for Geneva Watch Days?
- [05:15]
B
Yeah, I. I love Geneva Watch days, not least of which being because Geneva is beautiful this time of year and it's a much more relaxed event. As you guys know, our. Our previous forced removal from a hotel notwithstanding, we can go and meet with people in T shirts and jeans. And it really changes, I think, a lot of the energy because there's much less of a corporate structure there now. One of the things I think is really interesting here, you know, like any company, the four of us at Kollective divide labor up into various different buckets. And for whatever reason, I'm the guy who's always booking our meetings for Geneva Watch Days and for Watches and Wonders.
- [05:53]
A
Yeah. Which is why when you said it's a much more relaxed affair, I'm sort of scratching my head because the calendar this year is intense. I think we're actually more busy during Geneva Watch Days than we are at Watches and Wonders.
- [06:05]
B
Oh, we totally are. And that makes sense because we sell independent watches in Geneva Watch Days is fundamentally an independent watch event. And Gabe's not kidding. I mean, we're meeting with something like six to eight brands a day and running all over downtown Geneva to do that. But what I found interesting, you know, I start booking these meetings generally early summer, so I start reaching out to brands in June to secure times with them. And then slowly the calendar fills until we end up where we are now, where there's. And some days we don't even have a lunch. And what I find fascinating is that even after some of the economic news hit in early August, something counter to my expectations happened, which is more brands started reaching out to us, brands that we don't carry or brands that we've spoken to once or twice in the past. And I think that actually demonstrates, well, ultimately a very optimistic truth about what's happening here. One, shows that our industry on the independent side is resilient and is looking to figure things out, which is awesome news for collectors, great news for us who only sell independents. And two, a recognition that all things being equal. And this is going to come out as we start talking about some of the other topics that the American market, the US Market, is still a behemoth and still something that the hot horology and independent watch world are paying a great deal of attention to. Because, of course, what is the primary purpose of Geneva Watch Days? There is a consumer face to it. Consumers can go and meet with brands, of course, but.
- [07:36]
A
Well, that was the conceit originally. It was primarily conceived as a consumer show. And it's, it's changing sort of.
- [07:43]
B
It's conceived as this hybrid.
- [07:44]
A
Well, I remember the first year we went, we were one of the only US Dealers there. And when we would walk into a hotel suite or whatever or a brand's atelier or whatever it would be, there were mostly collectors who were, who were milling about, who were there, who had appointments before or after us. And that's really, that's really changing. I mean, now and the brands still do all that. And if you're a collector, it's still the best time to go to Switzerland. But the industry presence and the B2B focus of Geneva Watch Days, I think, has really ramped up. And the fact that there are brands now reaching out to us more so than ever to set up commercial meetings tells you the. The tenor of the show is changing.
- [08:25]
B
Well, I mean, it's a little chicken and eggy as well, because now more than ever, this is an anchor for fall releases because it is really other than Dubai Watch Week or Horology Forum, it's kind of the only other global tent pole in watchmaking that exists in the back half of the year.
- [08:44]
A
And that's one of the reasons I think it's important to do this preview of Geneva Watch Days is like, yes, there's the industry and the business implications of it. And let's chat about that. But I think just purely from like a consumer standpoint or the standpoint of watches themselves and watch releases. Oh my God. Are there more novelties at Geneva Watch Days this year? Because of course, we know from the brands that we carried, as I mentioned, who's releasing watches at and around Geneva Watch Days. There are also brands who reach out to us, as you mentioned, who want to schedule time and talk and they'll say, oh, and by the way, we have novelties. And then for some reason, we also get a lot, maybe it's not that surprising. We get a ton of press releases in our inbox about novelties that are releasing and it is unlike anything I've seen before in the years past. It was like, kind of cute to have a novelty at Geneva Watch Day, certainly for the first few years of Geneva Watch Days. And it was almost like this arbitrage launch window, where if you had something
- [09:45]
B
kind of, you know, you an alw,
- [09:48]
A
if you will, Arbitrage launch window. In other words, it's like it was. There was a show happening, you'd have people on the ground in Switzerland, there would be press there. And there wasn't much competition around releasing novelties because everyone else was doing it around the time of Watches and Wonders or throughout the years, throughout the year. And so you'd have fun. Like last year, great example of that was Moser and Studio Underdog. They stole the show.
- [10:10]
B
Yeah.
- [10:11]
A
With a very cheeky release, the Passion project, I think they called it. And that was kind of the tenor of Geneva Watch Days. You do something very collector focused there. It wasn't a crowded launch window window. So you could be clever and launch something there. Now, this week, it's like pretty much every brand is launching something during this show. And again, this contributes to fundamentally changing the tenor of the show from something that was like, hey, Geneva is open. We're opening our doors. Come in and look at watches to like, this is becoming more and more of a. Of a sort of dress code with standing, which I do appreciate. It's becoming something of. Of more and more of a conventional watch show.
- [10:51]
B
Yeah. And I mean, look, here's what we're expecting, broadly speaking, and then we can dive into the next topic and what we're going to be doing for you. So one of the things that we've reserved time for in our schedule is a podcast straight from Geneva Watch Days. So we will have a special episod of openwork that we're going to drop later this week, which is going to be a on the ground report, just like we did last year, of what we're hearing in meetings, what we're seeing, and of course, a discussion of novelties, both from a creative standpoint and a business strategy standpoint. But we're, we're also going to come back with a lot of those, too. So we're going to report on that to you. We're going to make sure you're aware of it. And of course, if you want to follow along with us, you can do that on Instagram. And you can do that by signing up for our mailing list@collectoprology.com if you aren't already there, to be able to get the on the ground updates. But all of this and all of the topics we're going to talk about are interrelated. So Geneva watch days is going to be in many ways the first time that the industry, Capital T, Capital I, comes back together in person since we saw each other in April. And history repeats itself. The tariff announcement, you know, landed like a lead balloon in April, and now we are all wizened economists and are returning together to talk in person. And I'm excited and interested and curious to see the outcome of that. But I think it's important to understand the business context in which we're going in or going or as an industry, that we're going into this, this space.
- [12:26]
A
So are you cueing the next topic? I was cue the next topic.
- [12:30]
B
You know, I was trying to do a really good transition and you just, you just threw a roadblock in my. Hey, everybody, we're going to move on to topic two now.
- [12:37]
A
Topic two. Well, just on the Geneva watch days thing, there's a lot that's going to happen. We're going to cover it. We're going to share with you what the discussions are happening inside the meeting rooms at Geneva, what we're hearing, all that kind of stuff. But just prepare yourself. There are a lot of brands releasing a lot of watches, so don't sleep on Geneva watch days if you're someone who likes to follow watch releases. Buckle up. It's going to get busy. Speaking of getting busy, here's my ham hand, guys.
- [13:03]
B
This is how you know we don't have a producer because they would never let us get away with this kind of like, tomfoolery.
- [13:11]
A
Well, I don't know about that. That's the charm of the podcast, man. But speaking about getting busy, I mean, we just got, as I mentioned, the July 2025 Swiss export data from the FH, which gives us some insight into what's going on with exports and sales of watches, wholesale watches from Switzerland into the industry.
- [13:32]
B
Does everyone know what the FH is?
- [13:34]
A
I have no idea.
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B
Why don't you tell us about it then, since I know you have it in front of you.
- [13:37]
A
Okay, so the, the FH is the federation of, of the Swiss watch industry. In, I'm guessing in, in French, it's probably abbreviated to the Federation of Hologerie or something like that.
- [13:49]
B
Fh, you should, you should be Doing duolingo with me too.
- [13:52]
A
But it's a trade organization for the Swiss watch industry which does a number of things including publishing, publicly publishing export data of watches from Switzerland to the rest of the world. And we just got their, their July 2025 numbers which are FAS, a very interesting picture of what's going on with the industry. No one is going to be surprised to hear as with April of 2025, in July of 2025 there was a huge spike in exports from Swiss watches. And by the way, July, typically there is a jump in, in watch exports because as we've mentioned before, August is typically the watchmakers holiday. So a lot of times brands are racing to get as much as they can out the door before they go on holiday, expecting orders, so on and so forth. And this year we saw about a 7% jump year over year. So compared to July of, of last year, 7% more in the way of exports this year. Which maybe doesn't sound like much, but I think the thing you have to do here is look at the broader context and what was actually driving that ex. That, that growth in exports. And when you do, when you dig beneath the surface, the picture gets quite stark. So remember, we have about a 6.9, about a 7% increase year over year in exports under the hood. Let's look at exports to the US market. A 45% surge in exports to the US market. So that's huge. Not surprising given what we've talked about on this podcast where a lot of brands, distributors and retailers ramped up exports to the US ahead of the threat of this 39% tariff. We talked about the fact that we went out of our way to order extra inventory. So that's in the numbers. And oh boy, is it in the numbers. I mean a 45% increase is massive. So that happened. However, considering that massive increase and you take a look at the rest of the world, the picture's not great. In fact it's quite, it's quite gloomy. So it's like you had a 45% increase to the US, the number one market, 7% overall. What is that? What is therefore happening in the rest of the world? Well, in the rest of the world, shipments are down to almost every other market. China, which is the number two market, sometimes the number one market saw a 6.5% drop and China has been dropping for years now and it continues to drop.
- [16:28]
B
So I have a theory about this.
- [16:29]
A
Well, there's one way of looking at it, right, which is like, well of course shipments elsewhere in the world dropped off because they are loading up inventory in the US So they may have, as we say, robbed Peter to pay. Paul? Oh, well, we were going to ship some watches to Germany, to France, to China, to Japan, where else? But like, we got to get our inventory out the door to the US you could of, of course argue that. But when you take a look at the bigger picture for the year, which we've talked about in, in the past, this is an industry that outside of the US Market, where I would absolutely say, yes, the numbers are, are, are not cooked, but ginned up because of front loading ahead of tariffs and the rest of the world, the picture for the full year ain't so great. So this is an industry that's facing a 39% tariff in the US and navigating that plus soft sales in the rest of the world, including their number two, sometimes number one market, China, which shows no sign of ending the softening.
- [17:27]
B
So one of the things that I struggle with when I look at data like this is we have in the first eight months of this year seen significant economic changes to the global market and we've seen people in industries all across the board, certainly not just in luxury, trying to hedge their bets, moving inventory from X to Y, reallocating assets, like all sorts of stuff. And I sort of wonder if what we're looking at are the vital signs of a person on steroids. And what I mean by that is the only time I've ever been on steroids was when I was super sick with, I had this crazy virus.
- [18:09]
A
The year you hit 48 home runs.
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B
Exactly. And what the doctor told me, and it was true because it's a very weird sensation being on steroids is that you feel fine. Steroids get you to this place where you feel like everything is okay, but you're still very sick. And I look at this and I wonder if that's sort of the same thing where these numbers are all over the chart and some places look insane and some places look really bad. And it's going to be really hard to get an idea of where we really are as an industry for at least another couple of quarters. So I look at this and I, you know, we, we can, we can make assumptions about this and say exactly, like, yeah, I re, you know, maybe company X reallocated, you know, inventory that was set for a certain market, sent it to the US they're hedging their bets, you know, etc. Is that really mean that Japan is down? Maybe, maybe not.
- [19:04]
A
The watches that Were going to Japan. A few of them got packed into the box going to the.
- [19:08]
B
That's what I'm saying, yeah. Is the Japanese market down? Well, the Japanese market might be down if there's no inventory there for them to sell. So like here, I'll give you an example.
- [19:14]
A
You're right, we need a couple of quarters because of course we'll look at the numbers for the next quarter that gets reported and all of a sudden shipments to the US will be way down. Oh no, Rome is burning. But of course they are because so much of that inventory was front loaded. So we need to, we need six months to see where this lands.
- [19:29]
B
And there's another side of this too, which is just the economic, like the way this business functions. So if you take independence for example, which are a relative drop in the bucket of the entire market, you take independence. We generally pay, I mean it depends but like we as retailers generally pay for watches when we receive them or some period of time thereafter. There are some occasions where prepayment happens, but generally the revenue on a watch isn't actually realized that. Now what's interesting, and export data is also weird because when you think about it from an independent standpoint, a lot of the watches that might be delivering from an independent were not sold this year. They might have been sold last year or two years prior. So it's not quite the same as when we look at Richemont's data, which we're going to look at shortly, where watches are sold in and then sell out on a more predictable pace than an independent does. So from, from, from our standpoint as independent retailers, this data to me is, is kind of like an interesting thing, but I don't know what I can take from it yet because it's on steroids. What I'm, what I am interested in is the next section here where we look at Richemont's data. Because Richemont's data is a little bit more timely in the sense that they make a watch, they deliver the watch, they sell the watch. That helps us understand exactly what sell in and sell through or sell out really is looking like. And that to me, like for example, if we saw that sell here, let's take Japan and I don't think we have this level of granular data. But let's say for example that there were a billion dollars of watches going to Japan and, and you know, there was a billion dollars of sell through that would be considered very successful because it's a complete sellout. But if the predicted amount comes down and it's 750 million and there's 750 million of sell through. It looks like the market's down 25% against goal, even if the sell in led to a sell out. And I just, I don't know how to interpret that yet and I don't feel like I can make an assessment of it. It. But it helps if we can get, if we can look at that in these large holding companies because if they say I sent 500 watches into a market and I sold 500 watches and then I had to decrease that to 300 watches, but I sold 300 watches. To me, that says the market's actually pretty healthy. There's just a diminished amount of available inventory.
- [21:59]
A
Yeah. Okay. Well, let's take a look at the Richemont data because it's hard with them to tell the difference between what sold wholesale versus retail because their numbers blend both because of course they sell direct themselves. They have their own website where they sell for their brands. They have their own company owned and operated stores where they're selling through. So and then they sell a ton to retail. So it's a blend of retail and wholesale data, but it's primarily wholesale. I think what's Also interesting, topic 3 about this Richemont Q1 data is it's kind of aberrant from what we're seeing in the rest of the industry. And the, and the picture for Richemont's watchmaking division or their Maisons, I think they call them, their specialist watchmakers. So those are brands like iwc, jlc, Vacheron, Piaget Alone and Zone. And there are of course others as well. Don't forget Baum and Mercier Asher. The, the data tells a story that's unique to Richemont. So let's, let's talk about the, the data. So this is their Q1 2026. So they start their financial year, year in. It ended in June. So they, their, their Q1 of 2026 is RQ3 starts. No, it's, it's RQ2. So it starts in the spring. So this is data from, starts in April. Yes, got it. This is April, May, June data from Richemont. We all know what was going on in April, May and June. Now great news. Richemont's doing, doing well in this climate. It, they saw a 6% increase in their revenue, which is, which is great. However, it's being led by their jewelry division. So their jewelry business is doing incredibly well. So that is Cartier, Van Cleef and Arpel. And a number of others. Their sales in their jewelry division are up 11%. Now I'm going to caveat this. I don't know where Cartier's watches are counted.
- [24:00]
B
Yeah, they're counted in the number for jewelry.
- [24:04]
A
Okay. So Cartier's watch business is in this, is in this, is in this reporting here. So 11% overall does include Cartier's watches. It would also include Van Cleef or
- [24:15]
B
at least I'm going to copy that. I'm fairly positive they do.
- [24:19]
A
Yeah.
- [24:19]
B
But if somebody out there knows differently at Richemont, please, please email us and
- [24:23]
A
correct us, let us know. Right, yeah. So I would assume again we don't know for sure, but watches aren't, do not constitute the bulk of Cartier business, at least in terms of revenue. So there are brands within Richemont, however that are focused on watchmaking. They call them their specialist watchmakers. We just named any number of them. Their sales are down 7.
- [24:43]
B
Well, before we go there too, I think it's also important for people to understand exactly how much of a behemoth Cartier is. So Richemont does not publicly disclose the exact amounts or percentages that these different individual brands make up. I mean but it can be extrapolated and on occasion data has come out. Last year UBS speculated and this, this was in the source on this is market watch that Cartier alone is responsible for almost half of Richemont's total sales. So Cartier in general is Atlas here holding up the rest of, of Richemont. So I think it's important to note that when we think about out, when we talk about some of these in
- [25:28]
A
other ways, in other words, there's no way their jewelry sales are up 11 if Cartier isn't doing well.
- [25:35]
B
No.
- [25:36]
A
Yeah, okay.
- [25:36]
B
No, no, no, that, that's my point. So, so what we're seeing here and I, you know, and some of these other smaller boutiques, they probably, or boutique brands like a Van Cleef and Arpels for example, you know, their average product is very expensive but their volume is much lower.
- [25:50]
A
Yeah.
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B
So Cartier is fascinating that it has both.
- [25:52]
A
Is there any insight into how significant Cartier's watch businesses as a component brand's revenue?
- [26:00]
B
No. But what we do know if we look at it from, from sort of a historical perspective, is that about, and I have to double check when this was, but about a decade ago when Cartier's watch business was doing poorly, it was valuable enough to Richemont to do a multi billion dollar buyback of that inventory, destroy it and then, or you know, quote unquote, destroy it and then reallocate it and redesign the entire line in order to preserve the integrity of it. And the theory there isn't just about the watchmaking, it's about the Cartier brand. Because you don't want to be in a scenario where a Cartier product is not retaining its value. And if you want evidence of this, you can look at what I think is probably one of the most iconic pieces of non watchmaking from Cartier, which is the love bracelet and the, and all the sort of products that fit in that category. Love bracelets have also begun appreciating quite significantly. I remember looking at one like 10 years ago and it was around four or $5,000. It's gone up in price significantly and the retained value on the secondary market has also increased. So Cartier above all is an incredibly valuable brand. And I think one of the things that Richemont to their credit has done with that brand and the leadership of Cartier is make sure that that brand integrity is unimpeachable because. And now we know why it is Richemont's source of primary revenue.
- [27:22]
A
Got it. Okay. I've looked at some FH export data because they do break things down at a brand level. Morgan Stanley does this as well. It would seem that Cartier is the number two watch brand by sales behind Rolex, ahead of Omega.
- [27:37]
B
But this makes sense, right? Because if we go back to that point of they are above all a valuable brand. It makes sense.
- [27:44]
A
Yes. It also further muddies the water, right? Because we're saying, okay, on the one hand, the jewelry division of Richemont is doing well at a set with an 11% increase in sales. But the watch, the specialist watchmakers are not doing well. Their sales are down 7% in this first quarter. Well, how much of that is Cartier? How much are watches overall not doing well? I think what I, what I'm getting at here is something is going on within Richemont because when you look at the numbers and you compare within the watch, watch focused brands because when you look at their performance relative to the market overall. So I was just doing some digging into our past show notes. In April, exports from Switzerland to the U.S. watch exports were up 149%. Right. And we just talked about in, in July, they're up like 40 something percent. Right? Like there was a massive surge in, in the second quarter of this year or in Richemont's first quarter of their 2026, a massive exports of watches into the U.S. now of course you've got to look, that was in April, the 149. You got to spread it out. But like a big, big, big, big increase. Yet Richemont is only up in terms of their exports into the US market 17%, which tells me something's going on there. I don't know what it is. There are brands in other categories who have said like, hey, we're not actually going to front load inventory into the us. There are some carmakers who are who I think Porsche is an example of this. Or they're like, yeah, if there are these tariffs and uncertainty around it, like we're actually just not going to export anything for the time being. And that was a strategic decision they made. It's their, they have a unique business model and position in the market. Maybe that's what's going on at Richemont where they're like, well we're just going to take a wait and see approach. But the fact that they did that while everyone else is rushing to get as many watches as they possibly could into this market tells me something's going on there. I don't know what it is, but I think that's what stood out to me as interesting in these numbers. Their watch focused brands are down and we could argue why that is and all that sort of stuff. Their export data doesn't reflect the export data of the industry, which tells me there may be trouble in paradise. And this is, this is, this is a group of brands in terms of their sales performance at least to keep an eye on.
- [30:08]
B
Yeah, it's also as just a final thought here, when we look at these large holding companies that you have a very small group of people, relatively speaking, making decisions that impact these billion dollar numbers. And those decisions are not necessarily privy to feedback from a market. And I don't mean internally within Richemont, but I do mean from like the authorized dealers. It doesn't mean authorized dealers don't provide that feedback. Of course they do. But in the end Richemont's gonna go do Richemont stuff.
- [30:42]
A
And yeah, I think by way of example, when we've been navigating the tariff stuff lately, we're on the phone every day with all the brands we work with and it's a two way discussion. When we talk to authorized retailers who sell or primarily sell large holding company brands, they're sort of surprised by that and they're like, well, we're just waiting for corporate to tell us what's gonna happen, right?
- [31:04]
B
So I bring that up to say, and this is why I think it's critical for us to give this several quarters. Richemont is a gigantic corporation. LVMH is a gigantic corporation. Gigantic corporations are good at manipulating data to tell stories that they want to tell and because they know that a lot of their retailers are married to them. If you're, for example, I know we're talking about Richemont, but if you're an Omega dealer. Dealer, or if you're a brief, if you're a Cartier dealer that like you cannot extricate yourself from that revenue easily, that is a critical component of your revenue. Which means.
- [31:44]
A
Well, there's not even, there's not even the. Yeah, I mean given what we just said about the scale and scope of Cartier's business, if you're a retailer it's got to be a very large part of your business. But beyond that, the nature of the agreements they have in place with these dealers really commit them.
- [32:00]
B
Right, but here's where I'm going with this.
- [32:02]
A
There's not a lot of flexibility built
- [32:03]
B
in depending on what those terms are. If they, and to be clear, I'm speculating here, I don't know, you've never
- [32:09]
A
signed a franchise agreement with Omega.
- [32:13]
B
No, no. But I've worked in big large corporations and I understand that what may end up happening here is the numbers that we see from Richemont may not be indicative of health of the industry because if the sales are healthy, but they continue to constrict, like margin, for example, or they increase required purchase or something that puts more downward financial pressure on retailers, for example, those retailers are then going to be carrying a lot of water for Richemont and some of that's going to break. Now that will not be obvious when you look at these top line numbers, but over the course of the next year it will. Because over time if it becomes simply unprofitable to sell certain products because of constrained resources, because remember when you're talking about Cartier and things like that, Cartier is figuring out how to pay the import duties and then delivering a product to somebody through Richemont North America, but that money's coming from somewhere and some of that's going to be coming from the dealers and their net profitability will decrease, which means that they'll have less capital on hand, but probably be required to purchase the same amount of product, if not more. And there's only so much like that's just math at a certain point in time. That's just going to collapse for some people and that will impact the overall health here. But we're not going to see that effect for like a year or more. So again, all of this data is interesting and I'm curious about it, but I don't think we're going to get any actual insight out of it.
- [33:50]
A
Yeah, no, we're looking at it in real time and your steroid point is a good one. And we'll, we'll the this, how this date, what the impacts of this data really are won't be clear for another six months to a year. You're absolutely right. But I do think it's worth noting, like, look, Geneva watch days, massive show this year. A ton of novelties coming there. There are over 60 brands officially participating in that show. There are many. Yeah, I counted on the website, did the math. There are many more exhibiting. There are a ton of novelties. And there's going to be a lot of discussion navigating the current environment in the US around tariffs. That will have a lot to report there in terms of how those discussions are going, what we're hearing, how brands are approaching it, a lot of news there. There, there is a lot of action in the export market. A huge surge in April, another huge surge in July. And then there's what's going on with Richemont, which is running kind of counter to that industry story overall. But you're right, we don't know what that means yet. And as we get more data, not just from Richemont, as these reports start to trickle in from other groups going forward, whether it's Swatch Group or lvmh, as much as we can understand about what's going on with the industry, we'll share that. We'll share what we see in the reporting. The quarterly reports we get from watches of Switzerland, they're a publicly traded company. That will be interesting. This picture is going to start to come in into broader focus and of course, we will be there every step of the way to share that with you guys. So, Asher, what do you think? Should we start packing our bags for Geneva and leave it there?
- [35:29]
B
I just do my long laundry.
- [35:30]
A
All right, time to do your laundry and check your passport, make sure it's not expired. That was a. That's a story for another time.
- [35:39]
B
Gabe, have you checked your passport?
- [35:41]
A
I certainly have. It's a lesson I learned the hard way involving a stop in El Paso, Texas on the way to Geneva a few years ago. But enough about that. Thank you guys so much for listening. This, of course, is open work. It's a production of Collective Horology. You can find us online@collective horology.com and get in touch with your questions, your feedback, your suggestions. Please continue sending those to us. They really make a difference. You can do that@podcastollectiveherology.com.