Horolonomics

A little more than two years ago, I published a post on Horolonomics entitled "Beware Mistaken Spreadsheet Authors: the LuxeConsult / Morgan Stanley Report." In that post, I questioned the accuracy of watch industry information offered by LuxeConsult / Morgan Stanley. You can visit that post for the details, but my concerns boil down to the fact that certain audited financial information was inconsistent with elements of the LuxeConsult / Morgan Stanley report.

My concerns were also motivated by the fact that this report published numbers about Rolex production, but Rolex themselves do not share production numbers with the public. A number is not data unless that number is gathered according to certain principles of measurement. For the life of me, I could not figure out how the authors of the LuxeConsult / Morgan Stanley report sourced their numbers for Rolex. To this day, I do not read the report or write about it because these concerns linger.

I will admit that I never know exactly how many people read my blog, although I've reviewed some indicators that encourage me to keep going. I've talked with people at various watch events and they've offered favorable comments. I get DMs from people on Instagram sharing responses to what I've written. And readers have also offered thoughtful comments on Horolonomics itself, which I love seeing. Along with watches themselves, it is interactions with readers that keep me interested in, thinking about, and writing about the watch industry. So I thank everyone out there.

There was, however, one response to my post on the LuxeConsult / Morgan Stanley report which I didn't enjoy. Someone affiliated with the report sent me an email in response to my blog post. I reproduce it here (I left out a closing sentence which may have identified the author, out of courtesy I am not naming the email author):

I think you didn’t quite understand the methodology and before writing such things as stated hereunder you should at least ask a few questions and try to understand.

The report is intended to be for Morgan Stanley’s clients; therefore if you would like a copy you can ask your local representative of the bank to forward you one. There is one true statement in your post hereunder “I'm not a fan of believing numbers when I can not understand the methodology”. Obviously, you did not understand, and you are mixing up the numbers of exports, EXW, wholesale and retail value. For an academic your “analysis” is pretty much unstructured.

Now look, I get it, this person didn't like my critique. That is fine. But people sitting behind a paywall shouldn't throw stones. See what I did there? And, honestly, "unstructured" is not really much of a critique. If I were wrong about the inconsistency between the report's numbers and audited public numbers, then my detractor should have spelt that out specifically, rather than taking some kind of broadside at my writing.

I went back and forth about whether I would reply to this email. In the end, I didn't, for a number of reasons. In a way, I'm replying now, though, because another Horolonomics reader reached out to me this week and revisited the likely unreliability of the Morgan Stanley / LuxeConsult watch report.

This reader provided a quote which corroborated my concerns. It was a quote I'd never seen before.

The commentary in question was reportedly from Mr. Nick Hayek, Jr. I couldn't find the source online so I emailed Swatch Group and they confirmed the quote and provided the source: a March 30, 2024 interview with Mr. Hayek published by Swiss newspaper Neue Zürcher Zeitung. Here is the text that my reader excerpted and sent me:

In this [Morgan Stanley / LuxeConsult report], Breguet's sales are estimated at a modest 210 million francs.

This completely superficial study gives an average sales price of 15,332 francs for Breguet. However, the actual average price is more than twice as high, namely 33,627 francs. Accordingly, Morgan Stanley is of course far off the mark when it comes to sales.

Morgan Stanley's study is often cited in the press as it is the only one that attempts to provide an overview of the watch industry. Is it only inaccurate in the case of Breguet?
When it comes to our own brands, the estimates are catastrophically wrong. The deviations are on average 60 percent in average prices, 40 percent in unit quantities and 30 percent in sales - sometimes in one direction and sometimes in the other. You can assume that they are wrong not only for the Swatch Group brands, but for the entire watch industry, Rolex included. This is not serious work and, above all, damages Morgan Stanley's reputation.

So there you have it. Look, I'm a relative newcomer to the watch industry and, for that reason, I was willing to maybe believe that there were some valid points made by my detractor from the Morgan Stanley / LuxeConsult project. However, the terrain shifted quite a bit in my favor when my concerns were corroborated by the man running a watch group with a market cap of more than $10 billion. Hayek's family has been in the watch industry for more than four decades. It would be silly to claim that he doesn't understand the industry, particularly when he has access to a whole lot of raw data about his own brands. The Morgan Stanley / Luxe Consult report just doesn't check out. Based on the state of play, it is my informed opinion that this product is exceedingly unrealiable for ascertaining the truth.

Nevertheless, at some point in 2025, I have no doubt we will "rinse and repeat" this excercise. The watch report will go out to Morgan Stanley's clients. A bunch of people will repeat the dubious rankings of brands and production volumes. I'll just have to decide if I want to repeat the sisyphean task of reminding everyone, again, that there are convincing reasons to believe that all this information is not accurate.

---

My book on the history of Rolex marketing is now available on Amazon! It debuted as the #1 New Release in its category. You can find it here.

You can subscribe to Horolonomics updates here.