Rhone Products UK Limited, the trading name for Patek Philippe’s distributor and retail operation for the UK and Ireland, saw sales slump by 42% in the financial year ending January 31, 2021.
Turnover dropped from £176.4 million to £103.7 million, the lowest sales figure since 2014.
Operating profit dropped by 61% from £23.7 million to £9.2 million.
The company received government grants of £530,231 relating to the the furlough scheme.
There is a stark difference between the performance of Rhone Products UK Limited and its subsidiary Patek Philippe Salon Limited, which runs the only Patek Philippe boutique in the country on London’s Bond Street.
Patek Philippe’s Bond Street Boutique
Sales for the retail business dropped by 63% from £66 million to £24 million, accounting for more than half the loss of turnover for the whole of Rhone Products UK and suggesting that wholesale revenue shrunk by 28% from £110 million to £80 million.
London’s non essential retail stores were closed for three months in the first wave of the pandemic and again from late December to mid-April 2021; just over one third of the financial year for Patek Philippe Salon Limited.
The retail business made a small loss of £87,607 compared to £11.2 million in the previous year.
The loss would have been worse were it not for £157,471 from the government’s furlough scheme and a business rates holiday valued at £948,733 in the financial year.
Patek Philippe’s UK financial results compare unfavourably with global results, which saw sales fall by around 20% after a loss of two months’ watch production because of a Q2 2020 lock down of factories in Switzerland.
Patek Philippe president Thierry Stern said in February this year: “At the end of the year, we were a good 20% down in terms of sales, but that’s not a problem because as a long-standing family business, you’re prepared for such things and have reserves.”
Putting the covid crisis into context, Mr Stern recalled: “My father has experienced two crises in which business suddenly plummeted by 50%.”
Financial results in the UK for the pandemic-ravaged year of 2020 have varied wildly for the world’s biggest watchmakers.
Rolex does not run any retail stores in the UK.
LVMH Watch & Jewellery (UK) Ltd, distributor of TAG Heuer, Hublot and Zenith for the UK and Ireland, reported turnover dipping by just 8.9% from £96.2 million to £87.6 million for the 12 months to December 31.
Turnover for The Swatch Group UK Limited, distributor and retailer for Omega, Longines, Tissot and all other group brands in the UK and Ireland, dropped by 39% from £180.5 million in 2019 to £110.3 million in 2020.
Richemont has not yet reported 2020/21 results as its financial year ends on March 31.
Impact of Covid-19
At the time Rhone Products UK filed its accounts, the company voiced its confidence in the enduring strength of the business and its confidence it would bounce back in 2021.
In a statement titled Impact of Covid-19 Pandemic, the company describes: “Patek Philippe has been in constant production since 1839 and owned by the Stern family since 1932. As a result, the covid-19 pandemic is not the first crisis the company has faced and, with our wealth of experience, we have no doubt we will weather the current storm. Both Rhone Products (UK) limited and Patek Philippe Salon Limited maintain substantial cash reserves to ensure that we are able to support ourselves in such times.
“Patek Philippe retains a very strong market share within our industry and demand for our product has never been stronger. We are extremely confident that, with the government’s roll out of the vaccination scheme in the UK, we will see a substantial increase in footfall and in turn an increase in revenue. Furthermore, we are confident that, with the government’s plans for non-essential retailers to return to trading in April, Patek Philippe Salon Limited will go from strength to strength in the coming year.”