20 years since Chrono24 was launched, and 13 years since it was taken over and given rocket boosters by co-CEOs Tim Stracke and Holger Felgner, the company’s investors, which have stumped up €200 million between them, have concluded a new CEO is required to take the business to the next level.
The company has not put up anybody for interview this morning, so the big question of why Carsten Keller is the man for the job, and what is the new mission?
Mr Keller arrives following eight years at Zalando, a publicly-traded German fashion and beauty ecommerce business valued at € 5.76 billion, where he was CEO of Connected Retail, a third party marketplace promoting thousands of brands and retailers to the 25 million active users of the main fashion site.
Being a senior executive at a listed company may be a clue to why Mr Keller has been hired.
Chrono24’s investors were rumoured to have wanted an initial public offering in 2021, but the timing did not feel right as market sentiment for tech stocks cooled.
As prices on the secondary watch market slumped and transactions dried up in the second quarter of 2022, that IPO looked (and continues to look) even further off.
Not even the star power of Christiano Ronaldo becoming an investor this summer moved the needle.
Before any sort of exit for Chrono24’s investors, the company will need to prove it can thrive in a very different secondary market to a few years’ ago.
Prices have been falling since April 2022, and show no signs of finding a floor. Consumers, naturally, are sitting on their hands in the hope that another month will bring further price reductions.
Flippers, which proliferated in the post-pandemic boom, can still make profits if they can buy the right watches from authorised dealers, but there is very little trading between themselves, which was the driving force behind rocketing prices in 2021.
For the vast majority of non-hyped watches, prices are fairly stable, but there is little momentum so fewer deals are being done.
Mr Stracke has always said that Chrono24 is operationally profitable, but its most recently published accounts, for the 2021 financial year, show sales revenue of €103.2 million and an operating loss of €13 million.
On the up side, the business still had cash and equivalents of €53.6 million at the end of the year, thanks in part by a funding round delivering €74.7 million into the coffers.
In September last year, Mr Stracke told WatchPro that Chrono24 had 10 million monthly users, and over 500,000 watches for sale.
The press release issued today, announcing the appointment of Mr Keller as CEO, says the site has 530,000 timepieces currently advertised and more than 9 million monthly active customers globally.
Taking both statements at face value suggests Chrono24’s active audience has shrunk by 10% and supply on its platform is up by 30,000 watches.
It would be healthier for supply to be tighter and Chrono24’s audience to be growing, which seems unlikely in the coming year as falling demand for new luxury watches is likely to lead to a rise in grey market dumping and discounting.
Chrono24 should make money in good times and bad. It does not own stock, apart from at its UK operation, The Barn by Chrono24, which used to be Xupes before it was bought in 2021.
That means its balance sheet has not been been hit as prices of the most traded watches halved.
But Chrono24 needs the transaction volumes and average transaction values to rise, which is hard to conceive when prices of the most traded luxury watches have almost halved in the past 20 months.
It also needs those transactions to complete on the platform, not “under the counter” as customers complete deals off-site to avoid fees.
Only its investors know whether this is happening, and whether the commissions and other fees are rising.
Mr Keller certainly has a daunting inbox as he takes the reins in January, but Chrono24 has arguably already weathered the worst of the current downturn, and will hope for a brighter 2024.
Editor’s note: This article was updated due to an earlier version reporting financial results from a subsidiary of the holding company, MPN Marketplace Networks GmbH.
