Issue 136: What I Want From 2025
Crime, bankruptcy, lawsuits and massive profits - and my thoughts on the year ahead
Hello and welcome back to The Fourth Wheel, the weekly watch newsletter that’s buzzing to be entering its third year. TFW will actually celebrate its third birthday at the end of April, which I can scarcely believe. For me, this is the first proper newsletter of 2025 (so I’m afraid we’re back behind the paywall for paid subscribers) and although I promised you a Grand Seiko review, I am going to hold that for now in favour of both clearing up some loose ends from 2024 and looking to the year ahead. The Christmas period always does funny things to our attention span - probably all the alcohol - so I’ve started with a few quite juicy items that I think might have slid under the radar from December, including the latest on Omega’s Frankenwatch scandal, and a lawsuit that has put another brand out of business. Then I’ve decided not to do predictions - instead you might call them requests. Demands, even. I’ve listed the five things I want to see more of, and five things I’d like to see less of, in 2025. Let’s see how that works out.
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Here’s a little taste of what you might have missed recently:
Four Things We Missed In December
We begin with four interesting titbits from the tail end of last year. Crime, lawsuits, large amounts of money… it’s all here.
The Latest On Omega’s Franken-Scandal
300 stolen watches & parts totalling CHF 5.7m!
Zurich newspaper NZZ reported in mid-December that Swatch Group CEO Nick Hayek is growing increasingly frustrated with the Swiss prosecutor’s office responsible for investigating and charging the alleged perpetrators of a CHF3m fraud against Omega. We will all remember the bare bones of the story - three Omega employees, namely Petros Protopapas, Jean-Claud Monachon and his son, were found, allegedly, to be responsible for a scheme that saw Omega itself pay vastly over the odds for a doctored Speedmaster that sold at Phillips in 2021.
The update, which is in German and behind a paywall, has not been widely picked up in the watch press or mainstream media. It reveals that Omega now confirms something long suspected by everyone I’ve spoken to off the record about the scandal: the damage was not limited to this one watch. Omega estimates that 300 watches and components in total have been stolen from its archive, with a total value of around CHF5.7m. It is not said over what time frame the thefts occurred, or whether these watches have been sold via auction or privately, but the NZZ notes that the two external parties (i.e. the Omega employees’ accomplices), whom it does not name, are still active in the watch dealing world.
The article says that prosecutors’ investigations turned up documents, communication records and financial transactions between the parties that show extensive activity beyond the sale of the one Speedmaster that made the headlines. Apparently several watches and components were also seized.
Mr Hayek’s frustration is said to stem from a disagreement within the office of the prosecutor over which department should take responsibility for pursuing and charging the case; it is alleged that different departments have spent a year trying to pass it off to each other, something that the prosecutor denied, saying it is standard practice for investigations to change teams as their scope develops.
As yet, no criminal charges have been brought and no element of the judicial process is open to the public until that happens. No timeline has been given by the prosecutor’s office.
My take: this is the story Omega wants dead and buried (as well as anyone trying to achieve a decent price for vintage Omega). But it is going to stumble around, zombie-like, for some time yet. The perceived delay is embarrassing for Hayek because it keeps the story alive, yet he can hardly relish the thought of a public trial. For the health of the market, justice needs to be seen to be done, but it isn’t going to be pretty, or quick.
A Tale Of Two Profit Margins
Breitling UK vs Richard Mille UK
Several watch companies in the UK filed their annual accounts in the weeks before Christmas. Nothing particularly unusual about that, although it is an advantageous time to do so if you are hoping everyone has better things to worry about than checking Companies House on December 22nd. Sadly, I do not.
I’m going to pick on two brands in particular, neither of whom have any reason to avoid scrutiny - at least, there is no dire news lurking in their data. My comparison of Breitling and Richard Mille is totally arbitrary, based simply on their figures landing within a week of each other, but it does provide some interesting validation of what we all perhaps know to be true.
Breitling UK reported its second-best year in history, for the year ending 31st March 2024. That’s the positive spin; the other way to put it would be to say that sales dropped 14.3 per cent year-on-year to £76.4m and operating profit dropped a similar amount, 14.7 per cent, to £3.05m. I’m actually inclined to take the positive spin here, because we all know the years 2021-22 and 22-23 now represent an artificially-inflated market. Taking them out of the picture, the 23-24 results for Breitling UK still represent a strong upward trend. WatchPro reported on it in that context, here, and looked a little bit more at how competitive Breitling is - essentially saying that it is tracking well against LVMH UK.
But I found myself looking at it alongside Richard Mille’s figures, and the following is nothing more than a stark illustration of how different the watch market is at the six-and-seven-figure level compared with ‘mainstream luxury’. Of course there is very little in common between the watches, the clientele, the volumes produced, the sales and marketing strategy and so on. Chalk and cheese. Apples and oranges. I know all that.
It turns out that cheese - in this case, Richard Mille - is eight times more profitable than chalk.
Richard Mille UK reported turnover in the year ending 31st December 2023 of £54,725,977. I dread to think how few watches that amounts to. It had a profit after tax of £11,069,572, compared to Breitling’s post-tax profits of £1,924,799. Which means that as a percentage of turnover, Richard Mille UK’s profit was 20.22 per cent compared with Breitling’s 2.52 per cent - or in other words, selling RM in London was eight times more profitable than selling Breitlings. Eight times! Like I said, it really only proves something we already knew to be true, but there’s knowing it and having the receipts.
Interestingly - if, like me, you enjoy being able to scour financial documents in an industry where that’s rarely possible - Richard Mille’s data goes a little further. It turns out that Richard Mille EMEA (Europe, Middle East and Africa) is headquartered in Britain, and files its accounts here. So in an unusual turn of events, we can see quite a big portion of a major brand’s bottom line.
Richard Mille EMEA filed, for the same reporting period as RM UK, turnover of CHF 378,758,311, an operating profit of CHF 132,360,102, and a post-tax profit of CHF 125,710,621. Although it files in the UK, it is all in Swiss Francs, so comparisons are tricky. But with the pound and the franc having been close to parity for the last few years I think we can still make some rough conclusions.
From this we can tell that RM UK accounts for roughly 12-15 per cent of RM EMEA1, and that the EMEA division as a whole is significantly more profitable again than the UK business alone, with post-tax profit representing just over 30 per cent of turnover. The company report states that Europe generated CHF 283,458,095 of revenue and the Middle East CHF 95,300,216. Africa is not itemised; I assume it’s bringing in next to nothing. According to the report, European boutiques were up 3.9 per cent year on year and the boutiques in Abu Dhabi and Dubai were up 16 per cent and 9 per cent respectively.
All of which, as I said, confirms what we know already: the upper echelons of the watch market are the healthiest, and that you can make really substantial profits selling small numbers of highly expensive watches. As a final note, I cross-checked these figures with the Morgan Stanley estimate of RM’s global turnover for 2023: CHF 1.54bn. Do we think that the rest of the world, sans EMEA, would bring in just under CHF1.2bn? I guess we can’t rule it out - Asia and the USA effectively bringing in four times as much as EMEA - but it feels like a lot.
Triple-Axis Tourbillon Trauma
Greubel Forsey Enforces Its IP With Fatal Results
Ever wonder what’s going on with (high-end indie brand with a penchant for football-themed watches) Purnell? No, me neither. But it turns out the avant-garde low-volume watchmaker, whose slogan is apparently ‘More Future Than Past’, now has… no future at all.
It is reported in Bilan.ch that the brand, which was founded in 2020, has been declared bankrupt and dissolved following a court judgement in November last year. The brand, which made roughly 200 watches a year, had become behind with its payments to suppliers, but the death blow was dealt by a legal challenge from Greubel Forsey.
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