Actual Profit in Reps

[davidmodic 1]

The other thing that was not mentioned here (apart from an allusion to raids) is that building replicas is illegal. A raid carries a punitive and financial cost, which needs to be recovered. Who knows how many watches do not make it to the dealer, and we know that a factory will not be raided probably, just the shop where they add the logos. These people will buy in bulk and add logos in batches. What if they just made a large purchase and they get raided? a lot of their capital vanishes in a blink of an eye. So they have us shoulder the cost and also pay for the risk they are taking...

[houndoggie 58]

24.5%

[fetasigma 0]

here is a china made homage/gen for you......with mechanical movment, and working GMT, brand new......sold for 10 bucks shipping included........works like a charm too.....so if you really think your standard rep costs more than a couple bucks to make, you are fooling yourself

 

before i got into reps i had a lot of fun with cheapies from asia and bought mechanical watches for less that 20 bucks all the time that were all brand new

 

 

That bracelet looks like it is about to fall apart

that was, admitidly the only real bad part about that watch, i gave it away to a medical student eons ago

[Flipper81 0]

You would shit a brick if you knew how much profit Gens make ... not for the retail seller but for the company ... but to be fair most brands spend a lot more than we realize on things other than R&D and construction ... like ads, sponsorships, charity, and all sorts of other marketing shenanigans but they obviously still make a hefty profit

I was talking with a fellow enthusiast today and he paid £230 for an AP RO rep which retails at £13000. Now do they really spend that much on ads and marketing etc to justify, let's say the watch costs them £1000 to make, an £11000 markup?

Is it just our human desire to have exclusivity that allows them to justify their hefty profit margins?

Are most manufacturers privately owned or public owned companies? Just s thought that crossed my mind this instant.

That's basically it ... most brands i.e. Rolex, Omega, Breitling, IWC etc. don't cost more than 1000 bucks(my guess) to actually build ... so every bit extra is mark-up to pay for the workers, HQ, ads, sponsorships, R&D, materials you name it. I wouldn't be suprised if all of that actually only adds up to 50% of the final price and the other 50% is pure profit (again my guess)

 

Profit margins are approximately 40-45% on average of the listed luxury watch makers. At least it was 2-3 years ago.

[DAY9080 3]

Same discussion can be had just about any product. Toyota vs Mercedes. Both do the same thing, but you won't see a sports hero or celebrity driving a Toyota. It's mostly about perception and marketing.

 

Bollocks. Ridiculous generalisation.

 

A good friend of mine is both a celebrity and a multi-millionaire. He drives a beat-up 30 year-old Landrover. His wife currently drives a Toyota.

I agree! I know many extremely wealthy people who drive average cars. Watches are something else! There is something about a watch that brings out a different side of a person.

[DAY9080 3]

There are companies out there that are turning out "rep" gold iWatches, by simply plating the stainless steel models.

People are repping iWatches?!

[DAY9080 3]

Rolex EBITDA is around 30% in line with it s peers in the luxury segment and confirmed by Rolex CEO

 

The company doesn t publish their financials but this market is very consistent from one vendor to another.

 

To compare, the ebitda of mercedes is 10% and Apple 36% so this gives you a scale of where luxury stands.

 

As for profit per watch it is good but not 500%. Rolex sells 820,000 watches a year to the AD network this translates into 4bn usd approx in sales for rollie... And that s about 5000 usd per watch so after all expenses rolex pulls into about 500-800$ in net profit per unit

 

One particularity is rolex does not pay taxes as it is a foundation thus giving it a slight edge against competitors (but i m not 100 pct sure this is true, i think the foundations ownes the shares but rolex pays taxes)

 

It s a good business but not a phenomenal one as the volumes have to stay constrained to ensure exclusivity. rolex is also investing massively in their factories and has a fully integrated production which is unique - they do all te steps of the watch making process in house and this comes at a significant cost.

 

Ok and now margins at out TDs ? My calculation give markups of 60-150usd per watch which covers costs for the website, the QC effort, the money mules, the transhippers, a few front men and spending their life answering our emails. Not a bad business but not a great one either. Net I d say a TD pulls in about 40$-60$ a piece on average generating an income of 100k$ usd a year.

 

Very detailed break down! Could you point me at some of your source material? Rolex is a company never really mentioned on the Bloomberg luxury market reports (well any recent reports that I have looked at) does the fact that they are, as you mentioned, a foundation allow them to keep financial performance private? My private limited company accounts are available as public records so I find this fascinating.

[DAY9080 3]

24.5%

Totally random but thanks!

[Left Coast Guy 24]

Rolex EBITDA is around 30% in line with it s peers in the luxury segment and confirmed by Rolex CEO

 

The company doesn t publish their financials but this market is very consistent from one vendor to another.

 

To compare, the ebitda of mercedes is 10% and Apple 36% so this gives you a scale of where luxury stands.

 

As for profit per watch it is good but not 500%. Rolex sells 820,000 watches a year to the AD network this translates into 4bn usd approx in sales for rollie... And that s about 5000 usd per watch so after all expenses rolex pulls into about 500-800$ in net profit per unit

 

 

Sorry, but I'm calling bullshit on this. First, Rolex is private with no public debt....any information you'd claim to have is either false or complete conjecture. Second, citing Apple and Mercedes as comparable luxury brands, shows a complete lack of knowledge for the luxury sector....there are marked difference in operations and organizational structure from a tech business to a car company to a luxury goods maker. Like I said before, there are ready public comps out there in LVMH and Richemont....Richemont is notoriously fat in SG&A and they're doing nearly 30% EBITDA margins. If you don't think that's a phenomenal business, I'm not sure what is...

[insert-here 0]

Same discussion can be had just about any product. Toyota vs Mercedes. Both do the same thing, but you won't see a sports hero or celebrity driving a Toyota. It's mostly about perception and marketing.

 

Bollocks. Ridiculous generalisation.

 

A good friend of mine is both a celebrity and a multi-millionaire. He drives a beat-up 30 year-old Landrover. His wife currently drives a Toyota.

I agree! I know many extremely wealthy people who drive average cars. Watches are something else! There is something about a watch that brings out a different side of a person.

Really? So you don't know any millionaires who wear rep watches?

[Testomatic 0]

Rolex EBITDA is around 30% in line with it s peers in the luxury segment and confirmed by Rolex CEO

 

The company doesn t publish their financials but this market is very consistent from one vendor to another.

 

To compare, the ebitda of mercedes is 10% and Apple 36% so this gives you a scale of where luxury stands.

 

As for profit per watch it is good but not 500%. Rolex sells 820,000 watches a year to the AD network this translates into 4bn usd approx in sales for rollie... And that s about 5000 usd per watch so after all expenses rolex pulls into about 500-800$ in net profit per unit

 

One particularity is rolex does not pay taxes as it is a foundation thus giving it a slight edge against competitors (but i m not 100 pct sure this is true, i think the foundations ownes the shares but rolex pays taxes)

 

It s a good business but not a phenomenal one as the volumes have to stay constrained to ensure exclusivity. rolex is also investing massively in their factories and has a fully integrated production which is unique - they do all te steps of the watch making process in house and this comes at a significant cost.

 

Ok and now margins at out TDs ? My calculation give markups of 60-150usd per watch which covers costs for the website, the QC effort, the money mules, the transhippers, a few front men and spending their life answering our emails. Not a bad business but not a great one either. Net I d say a TD pulls in about 40$-60$ a piece on average generating an income of 100k$ usd a year.

 

Very detailed break down! Could you point me at some of your source material? Rolex is a company never really mentioned on the Bloomberg luxury market reports (well any recent reports that I have looked at) does the fact that they are, as you mentioned, a foundation allow them to keep financial performance private? My private limited company accounts are available as public records so I find this fascinating.

 

The info on rolex is scarce but there is no particular reason that their financials would deviate extensively from the industry as a whole. In a rare interview to swiss news paper letemps their ceo acknowledged the numbers that are mentionned. He acknowledges because he has no obligation to answer these questions.

 

The rolex founder tansfered ownership of his company to a trust tmhat bears his name. Under swiss trust law (fondation) they are considered private entities and do not need to file for financial disclosure.

The impact of the ownership by a Trust on the tax structure of rolex is unclear to me but it is said they are tax exempt.

 

The only comparable model that comes to mind is Bose in the us which is also owned by a trust set up by the founder.

 

As for the sources look here http://www.letemps.ch/economie/2014/06/13/rolex-va-mieux-meilleur-mondes-possibles

 

And look also for the Vontobel annual report on luxury watches, they are the private bank following the swiss watch industry and are the ones trying to reverse eng the rolex books.

 

 

[Testomatic 0]

Rolex EBITDA is around 30% in line with it s peers in the luxury segment and confirmed by Rolex CEO

 

The company doesn t publish their financials but this market is very consistent from one vendor to another.

 

To compare, the ebitda of mercedes is 10% and Apple 36% so this gives you a scale of where luxury stands.

 

As for profit per watch it is good but not 500%. Rolex sells 820,000 watches a year to the AD network this translates into 4bn usd approx in sales for rollie... And that s about 5000 usd per watch so after all expenses rolex pulls into about 500-800$ in net profit per unit

 

 

Sorry, but I'm calling bullshit on this. First, Rolex is private with no public debt....any information you'd claim to have is either false or complete conjecture. Second, citing Apple and Mercedes as comparable luxury brands, shows a complete lack of knowledge for the luxury sector....there are marked difference in operations and organizational structure from a tech business to a car company to a luxury goods maker. Like I said before, there are ready public comps out there in LVMH and Richemont....Richemont is notoriously fat in SG&A and they're doing nearly 30% EBITDA margins. If you don't think that's a phenomenal business, I'm not sure what is...

 

I don t claim to have i just read it as you should too before you make a comment.

 

Citing other companies such as apple or mercedes helps the non financial reader understand what a % ebitda means. They are here to illustrate what companies we deem as high end and profitable look like on that financial metric. Don t assume members of this board do not understand a car manufacturer and a high tech company are different to a watch manufacturer - we re dumb but not as much as you think.

 

As the business is constrained in volume and as rolex is not allowed by it s statutes to expand into other luxury product lines the company has no option to grow revenue at a faster pace. This makes it a good business but not a phenomenal one.

 

 

[myaz 3]

I agree! I know many extremely wealthy people who drive average cars. Watches are something else! There is something about a watch that brings out a different side of a person.

Again, these generalizations, be they cars or watches, do not necessarily apply.

 

Just like you know wealthy people driving average cars, I have met a number of wealthy people that don't give a rat's ass about watches. In fact, many people that you won't suspect to be millionaires got to be that way by living below their means, meaning they have avoided expensive status symbols in order to build wealth.

 

I had a mentor tell me a long time ago: you can have any thing you want but you can't have everything you want. Hence even Fluff can have his gen Seawolf with the right plan.

[DAY9080 3]

Same discussion can be had just about any product. Toyota vs Mercedes. Both do the same thing, but you won't see a sports hero or celebrity driving a Toyota. It's mostly about perception and marketing.

 

Bollocks. Ridiculous generalisation.

 

A good friend of mine is both a celebrity and a multi-millionaire. He drives a beat-up 30 year-old Landrover. His wife currently drives a Toyota.

I agree! I know many extremely wealthy people who drive average cars. Watches are something else! There is something about a watch that brings out a different side of a person.

Really? So you don't know any millionaires who wear rep watches?

 

Haha, my first flame!! !

 

In answer to your question, no! That was my point, watches bring out a side of people that luxury cars don't! People are more inclined to invest in a good time piece. It could be the fact that you don't really lose much money on a watch!

[DAY9080 3]

I agree! I know many extremely wealthy people who drive average cars. Watches are something else! There is something about a watch that brings out a different side of a person.

Again, these generalizations, be they cars or watches, do not necessarily apply.

 

Just like you know wealthy people driving average cars, I have met a number of wealthy people that don't give a rat's ass about watches. In fact, many people that you won't suspect to be millionaires got to be that way by living below their means, meaning they have avoided expensive status symbols in order to build wealth.

 

I had a mentor tell me a long time ago: you can have any thing you want but you can't have everything you want. Hence even Fluff can have his gen Seawolf with the right plan.

 

Fair comment! Everyone has their poison and depending on what that is they will be willing to pay a premium for it.

[Dr Yan 8]

Regarding the 'celebrities don't drive Toyotas ' statement.....

I will just say one word.......Prius.

[HTD 0]

I Think it it the flair that is around the gens. The luxury style. And ofcourse development costs, movement etc. The labour costs in the rep world are shockinly low. For me that is the only downside. The ethical aspect...

[Hornet 1]

Putting gen Swiss pubes in the movement costs a bloody fortune.......

 

 

 

......rep factories use cheap replica pubes.

[trailboss99 994]

I mean why do people honestly pay $50k for a Patek? Is it really that superior to a watch much less the cost?

Yes it is. You have obviously never held a Patek or even seen one up close. Patek are a part of the small elite group at the very top of watchmaking. This group contain Patek, Lang, VC and maybe two or so others. A Patek is hand made by a single artisan over as much as a year and is worth every last cent of it's price tag.

 

 

Same discussion can be had just about any product. Toyota vs Mercedes. Both do the same thing, but you won't see a sports hero or celebrity driving a Toyota. It's mostly about perception and marketing.

 

Bollocks. Ridiculous generalisation.

 

A good friend of mine is both a celebrity and a multi-millionaire. He drives a beat-up 30 year-old Landrover. His wife currently drives a Toyota.

I agree! I know many extremely wealthy people who drive average cars. Watches are something else! There is something about a watch that brings out a different side of a person.

Really? So you don't know any millionaires who wear rep watches?

He does, he just doesn't know it. There are folk on this very forum who could (if it were for sale) buy the afore mentioned Bremont (the company that is) several times over.

[greg_r 81]

Same discussion can be had just about any product. Toyota vs Mercedes. Both do the same thing, but you won't see a sports hero or celebrity driving a Toyota. It's mostly about perception and marketing.

 

Bollocks. Ridiculous generalisation.

 

A good friend of mine is both a celebrity and a multi-millionaire. He drives a beat-up 30 year-old Landrover. His wife currently drives a Toyota.

I agree! I know many extremely wealthy people who drive average cars. Watches are something else! There is something about a watch that brings out a different side of a person.

 

Nonsense. The same guy is a member here - he owns a wide range of both gens and reps.

 

You'd be surprised at some of the folks on these fora.

[Chavezzito 121]

Regarding the 'celebrities don't drive Toyotas ' statement.....

I will just say one word.......PRIUS.

 

true!!

[DAY9080 3]

Putting gen Swiss pubes in the movement costs a bloody fortune.......

 

 

 

......rep factories use cheap replica pubes.

 

Enough with the pubes!! Hahaha!!

[DAY9080 3]

Same discussion can be had just about any product. Toyota vs Mercedes. Both do the same thing, but you won't see a sports hero or celebrity driving a Toyota. It's mostly about perception and marketing.

 

Bollocks. Ridiculous generalisation.

 

A good friend of mine is both a celebrity and a multi-millionaire. He drives a beat-up 30 year-old Landrover. His wife currently drives a Toyota.

I agree! I know many extremely wealthy people who drive average cars. Watches are something else! There is something about a watch that brings out a different side of a person.

 

Nonsense. The same guy is a member here - he owns a wide range of both gens and reps.

 

You'd be surprised at some of the folks on these fora.

 

I ask myself the question, if I didn't have the commitments that I do, would I buy more expensive gen watches than I currently do? Probably but I also feel like I get a similar experience from owning the rep. I guess it's a personal thing like most other things. Different strokes for different folks.

 

 

[RUSH2112 11]

Same discussion can be had just about any product. Toyota vs Mercedes. Both do the same thing, but you won't see a sports hero or celebrity driving a Toyota. It's mostly about perception and marketing.

 

Bollocks. Ridiculous generalisation.

 

A good friend of mine is both a celebrity and a multi-millionaire. He drives a beat-up 30 year-old Landrover. His wife currently drives a Toyota.

I agree! I know many extremely wealthy people who drive average cars. Watches are something else! There is something about a watch that brings out a different side of a person.

 

Nonsense. The same guy is a member here - he owns a wide range of both gens and reps.

 

You'd be surprised at some of the folks on these fora.

 

I ask myself the question, if I didn't have the commitments that I do, would I buy more expensive gen watches than I currently do? Probably but I also feel like I get a similar experience from owning the rep. I guess it's a personal thing like most other things. Different strokes for different folks.

 

I would not buy real expensive gens if money were no object. The main difference in quality between reps and gens IMO is in the movement and I have a phone that does an even better job at the time than the gens. The reps accomplish exactly what I need them for; a bit of bling and I like looking at them.

[DAY9080 3]

Same discussion can be had just about any product. Toyota vs Mercedes. Both do the same thing, but you won't see a sports hero or celebrity driving a Toyota. It's mostly about perception and marketing.

 

Bollocks. Ridiculous generalisation.

 

A good friend of mine is both a celebrity and a multi-millionaire. He drives a beat-up 30 year-old Landrover. His wife currently drives a Toyota.

I agree! I know many extremely wealthy people who drive average cars. Watches are something else! There is something about a watch that brings out a different side of a person.

 

Nonsense. The same guy is a member here - he owns a wide range of both gens and reps.

 

You'd be surprised at some of the folks on these fora.

 

I ask myself the question, if I didn't have the commitments that I do, would I buy more expensive gen watches than I currently do? Probably but I also feel like I get a similar experience from owning the rep. I guess it's a personal thing like most other things. Different strokes for different folks.

 

I would not buy real expensive gens if money were no object. The main difference in quality between reps and gens IMO is in the movement and I have a phone that does an even better job at the time than the gens. The reps accomplish exactly what I need them for; a bit of bling and I like looking at them.

 

Well said. Really honest comment and I have to say I respect that!