Stern Interview on NY Times

[Kittayos]

Not sure if this has been posted. Good read nonetheless. He wore 5740/1g that day. Some interesting details.

https://www.nytimes.com/2020/01/12/s...rry-stern.html

By Robin Swithinbank
Jan. 12, 2020

GENEVA — Thierry Stern looked pleased when, in an interview in early December, he said 2019 would be a record year for Patek Philippe.

“I’m not running after records every year, though,” Mr. Stern, the chief executive, said, declining to detail the company’s turnover. “This is the beauty. We don’t have any shareholders. We don’t care.”

Patek Philippe has been in the hands of the Stern family since 1932 and, despite repeated reports of interest from major luxury groups, is still independent. It does not make its financial results public, but according to estimates by the Swiss private bank Vontobel, in 2018 it had sales of 1.45 billion Swiss francs ($1.49 billion), making it Switzerland’s fifth-largest watch company.

But unlike the four ahead of it, a list that is topped by Rolex and Omega, Patek Philippe’s output is small in comparison. Mr. Stern says Patek makes 62,000 watches a year. Rolex is believed to make more than a million.

Mr. Stern, who succeeded his father, Philippe Stern, as president in 2009, said his ambition was to grow the company by no more than 3 percent each year. “If the economy’s not so good, we can decrease also,” he said.

But there is little sign of retreat. In 2005, when I first interviewed Mr. Stern and his father, he said the company was making 30,000 watches a year, less than half the current figure.

And, Mr. Stern said in December, the company employed 460 people in 1996 when it moved to its headquarters in the Geneva suburb of Plan-les-Ouates. That number has risen to 1,600, with 600 more staff members worldwide.

To accommodate the growth, the company already has moved into part of a sprawling almost 1.2 million-square-foot building being finished alongside its headquarters. Mr. Stern said the company funded the construction cost of more than one billion Swiss francs, adding with a wry smile, “We don’t like banks.”

While there have been some changes, Mr. Stern, 49, said he continues to follow in his father’s footsteps. “It was clear for me and my Dad that we should keep the same strategy,” he said, although Patek has benefited from digital tools like Instagram. In the 2005 interview, he said, “we are not a fashion brand,” an approach he has maintained.

Last year there were news reports that Rolex wanted to buy Patek. “I think I made it quite clear that I will not sell,” Mr. Stern said. “We should be proud of it when big companies want to buy Patek because that means we are doing something right. But we are not for sale.”

Instead, he said, he intends to be at the company for what he called “many years” before offering the keys to one of his two sons. The elder, at 18, is studying for the hospitality industry, but the younger, who is 16, has just started studying watchmaking and working part time at the factory.

“I didn’t have two children to take over Patek,” Mr. Stern said. “They have to make their own choice. We will always find somebody that will take care of Patek Philippe.”

Looking to the next decade, Mr. Stern said that he had no plans to expand into new territories and that he was not pushing hard in China, which his competitors have identified as critical to traditional watchmaking’s long-term success. According to the Federation of the Swiss Watch Industry, Swiss watch exports to mainland China rose 32.8 percent from 2016 to 2018. Patek opened its first branded showroom in Shanghai in 2005.

“I’m not afraid to stay behind,” Mr. Stern said. “We are already in 74 countries. I don’t have the capacity, and I would not destroy another market just to shift watches to China. But also, we go step by step. This is how we do our business. It’s worked in the whole world.”

He said the approach had protected Patek’s business when markets have declined. In December, for example, the federation reported that exports to Hong Kong, which it lists separately from mainland China, were down by 26.7 percent in November year over year, eroded by the city’s continued civil unrest and related economic recession.

“Hong Kong has not really affected us,” Mr. Stern said. “We are down maybe 30 percent, which is quite good. Some brands are down 70 or 80 percent. That’s a disaster. But that’s their mistake. They were focusing too much on Hong Kong.”

If he has a concern, Mr. Stern said, it is the rise of what the watch industry calls “flippers,” buyers who purchase high-demand watches to resell them at a premium, a practice he says he wanted to curtail. But he said he was not working with retailers to solve a problem in which prices of pieces such as Patek’s steel Nautilus have skyrocketed on the pre-owned market, sometimes to more than double list price.

“Maybe sometimes the retailers are part of it,” he said, but he does not lay all the blame at their doors. “We buy back a lot of watches every year from the secondary market, because we want to know why a watch is for sale.”

However, he said that if the company learned that a retailer is selling watches to customers involved in such resales, and the retailer did not prevent such activity, the company would end the retailer’s Patek account. “If I have the proof, then I act,” Mr. Stern said.

He said rising prices in the primary market had changed Patek Philippe’s customer profile. “We are losing so many people who are enjoying watches, because they cannot afford it anymore,” he said. “But we are also gaining a whole new young generation who are very successful, made a lot of money and who are willing to invest in Patek. That has really changed.”

Mr. Stern remains bullish about his company’s fortunes.

“I don’t see why Patek Philippe should be in danger as long as we are very careful,” he said. “The tough part is to stay independent.”

[locutus49]

Fantastic interview. This makes me happy to own a Patek.

[Fat_ninja]

“But we are also gaining a whole new young generation who are very successful, made a lot of money and who are willing to invest in Patek“


That solves it watchss are investments ...lol

[Ichiran]

"However, he said that if the company learned that a retailer is selling watches to customers involved in such resales, and the retailer did not prevent such activity, the company would end the retailer’s Patek account. “If I have the proof, then I act,” Mr. Stern said."

[capital]

Originally Posted by Fat_ninja

“But we are also gaining a whole new young generation who are very successful, made a lot of money and who are willing to invest in Patek“


That solves it watchss are investments ...lol

To be correct, he's saying invest in Patek (the company) not in Patek watches . The way I understand it is that these customers are keeping Patek in the high-end watch game.

[RHIII]

Great interview - as well as a solid perspective from a Captain of the industry.

Had a philosophical conversation over the weekend with a great friend- and fellow enthusiast/collector - pondering who will be the ‘one’ to ‘re-invent’ the industry - for lack of a better way to word. Who will grab the bull by the horns and risk re-structuring the ‘bid’ for watches - more so specific references. Getting out of the shadow of whatever a VIP (or ridiculously called VVIP or VVVIP) of a dealership - and allow for a more granular distribution of the watches....given the current state of the market...interesting thoughts.


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[Fat_ninja]

Originally Posted by Ichiran

"However, he said that if the company learned that a retailer is selling watches to customers involved in such resales, and the retailer did not prevent such activity, the company would end the retailer’s Patek account. “If I have the proof, then I act,” Mr. Stern said."

The Patek AD contracts are pretty intense... you could have middle management change or sales change that they don’t agree with and they could pull the AD status.

[Fat_ninja]

Originally Posted by capital

To be correct, he's saying invest in Patek (the company) not in Patek watches . The way I understand it is that these customers are keeping Patek in the high-end watch game.

Lol. Nuances

[key]

“The tough part is to stay independent.”

Hope Patek continues to remain independent for many years to come.

[unknown]

flippers are good !!!

Let's be serious if some Patek would not sell with a premium the brand would not be that popular and it would not sell like it sells today.
It's because of the premiums it gets so much attention.

Believe me.... Breguet, Zenith , Girard Perregaux, Blancpain, and all the rest woul love to be in the same situation that some of their watches are unobtainable
And it's only because they are unobtainable that we see this premiums
Don't say it are the flippers who created the situation.
Patek keeps the 5711a production low because it's damn good publicity. If they would make 5000 - 10000 less Calatrava and 5000 more 5711 per year they waitlist AND premium AND flippers would be gone.
So if they really want to do something against it ... they could ... but it's smarter and more prestigious not to.

Besides in EVERY Patek magazine their are always a few pages dedicated to auction results, or how well they performed once again. So please don't tell me you're not happy your product fetching top prices ... vintage AND new

[Bearxj86]

Originally Posted by unknown

flippers are good !!!

Besides in EVERY Patek magazine their are always a few pages dedicated to auction results, or how well the performed once again. So please don't tell me you're not happy your product fetches top prices ... vintage AND new

I haven't received the latests Patek magazine (everyone got their) despite being registered for 5 watches. I am not happy. Either that or the wife threw it away by mistake. If so, she is doomed.

[Russell996]

Originally Posted by unknown

flippers are good !!!

Let's be serious if some Patek would not sell with a premium the brand would not be that popular and it would not sell like it sells today.
It's because of the premiums it gets so much attention.

Believe me.... Breguet, Zenith , Girard Perregaux, Blancpain, and all the rest woul love to be in the same situation that some of their watches are unobtainable
And it's only because they are unobtainable that we see this premiums
Don't say it are the flippers who created the situation.
Patek keeps the 5711a production low because it's damn good publicity. If they would make 5000 - 10000 less Calatrava and 5000 more 5711 per year they waitlist AND premium AND flippers would be gone.
So if they really want to do something against it ... they could ... but it's smarter and more prestigious not to.

Besides in EVERY Patek magazine their are always a few pages dedicated to auction results, or how well they performed once again. So please don't tell me you're not happy your product fetching top prices ... vintage AND new

Flippers are bad!

Flippers are not the same as collectors who buy and sell to change their collection around as and when they feel a piece no longer fits. The auction results in the magazine are always for older non current pieces.

I'm sorry, but I couldn't disagree with your post more! Fact is Patek do take action against AD's and individuals who flip.

[Fat_ninja]

I’m a big believer of liquidity... , I don’t care if you are a flipper or not. not because I need to sell but because I believe it’s a more functional market providing price discovery.


You can’t have a market that cares about vintage values but not new issuances...

[sensui]

Great article read it last night. Love his wear on the 5740g proto also.

[martinr]

is this what you mean by liquidity?

[Fat_ninja]

Originally Posted by martinr

is this what you mean by liquidity?

That’s chicken of the sea...buddy. I’m more like Ramen boy... narwhal

[pam66]

Originally Posted by Fat_ninja

“But we are also gaining a whole new young generation who are very successful, made a lot of money and who are willing to invest in Patek“


That solves it watchss are investments ...lol

haha

[321Forever]

Reality. Only the really wealthy can get a 5711 at a dealer, after buying a substantial amount of PP product. The rest have no choice but to buy grey. He pretty much said all that. And he’s not losing sleep over it. I agree to remain independent as a top tier brand offers him few options.

[Bearxj86]

His 5740 is pretty beat up. Nice.

[JJ WA]

Cool reading. But the very last sentence is kinda weird and inconsistent with the rest of the content imho. The conclusion should be that being independent is great, awesome, not ‘tough’.

[brandrea]

Originally Posted by Russell996

Flippers are bad!

Flippers are not the same as collectors who buy and sell to change their collection around as and when they feel a piece no longer fits. The auction results in the magazine are always for older non current pieces.

I'm sorry, but I couldn't disagree with your post more! Fact is Patek do take action against AD's and individuals who flip.

Agreed, and interesting to hear him quoted directly in the article saying so.

[dauster]

Originally Posted by unknown

flippers are good !!!

Let's be serious if some Patek would not sell with a premium the brand would not be that popular and it would not sell like it sells today.
It's because of the premiums it gets so much attention.

Believe me.... Breguet, Zenith , Girard Perregaux, Blancpain, and all the rest woul love to be in the same situation that some of their watches are unobtainable
And it's only because they are unobtainable that we see this premiums
Don't say it are the flippers who created the situation.
Patek keeps the 5711a production low because it's damn good publicity. If they would make 5000 - 10000 less Calatrava and 5000 more 5711 per year they waitlist AND premium AND flippers would be gone.
So if they really want to do something against it ... they could ... but it's smarter and more prestigious not to.

Besides in EVERY Patek magazine their are always a few pages dedicated to auction results, or how well they performed once again. So please don't tell me you're not happy your product fetching top prices ... vintage AND new

Interesting idea and I partially agree but how about making sure the customer doesn't loose 20-40% once he walks out of the store with a dress watch. Hello world time , hello 5270...

[srvrf]

People getting priced out doesn't seem like it is a huge concern because there are so many people with money at the high end. Investopedia says there are about 5.28 million people in the world with at least $1 million in investable assets. Assuming that's their general target audience, they only need to sell to about 1% of high net worth individuals to sell all 62,000 watches.

[CoveWatch]

Originally Posted by bearxj86

I haven't received the latests Patek magazine (everyone got their) despite being registered for 5 watches. I am not happy. Either that or the wife threw it away by mistake. If so, she is doomed.

That's pretty funny! I even received the latest issue and I'm only registered to two watches that aren't even mine (purchased them for my parents)! I think you should check with the wife

[locutus49]

The same here. I registered on the Patek website and checked the block for subscription, and after two months: nada. In a few weeks i will check the status.

Originally Posted by bearxj86

I haven't received the latests Patek magazine (everyone got their) despite being registered for 5 watches. I am not happy. Either that or the wife threw it away by mistake. If so, she is doomed.

[Collector2019]

Originally Posted by unknown

flippers are good !!!

Let's be serious if some Patek would not sell with a premium the brand would not be that popular and it would not sell like it sells today.
It's because of the premiums it gets so much attention.

Believe me.... Breguet, Zenith , Girard Perregaux, Blancpain, and all the rest woul love to be in the same situation that some of their watches are unobtainable
And it's only because they are unobtainable that we see this premiums
Don't say it are the flippers who created the situation.
Patek keeps the 5711a production low because it's damn good publicity. If they would make 5000 - 10000 less Calatrava and 5000 more 5711 per year they waitlist AND premium AND flippers would be gone.
So if they really want to do something against it ... they could ... but it's smarter and more prestigious not to.

Besides in EVERY Patek magazine their are always a few pages dedicated to auction results, or how well they performed once again. So please don't tell me you're not happy your product fetching top prices ... vintage AND new

Thank you, sums it up really.

[AK797]

He wore a 5740? That is against his own philosophy of not wearing sort after models so his clients do not look longingly at his wrist, a comment he made a few years ago to explain why he was wearing a lowly 5167 back when there was no wait list... Insta-itis gets to everyone in the end.

[RHIII]

Originally Posted by AK797

He wore a 5740? That is against his own philosophy of not wearing sort after models so his clients do not look longingly at his wrist, a comment he made a few years ago to explain why he was wearing a lowly 5167 back when there was no wait list... Insta-itis gets to everyone in the end.

Ah how I remember those days. I remember when my AD couldn’t GIVE a 67 away — and they always had at least 2 5711s available....oh well.


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[drmizzou]

nice read. thanks

[drmizzou]

Originally Posted by RHIII

Ah how I remember those days. I remember when my AD couldn’t GIVE a 67 away — and they always had at least 2 5711s available....oh well.


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which i had some liquidity back then. just got my 5726 in december and wish it had been offered to me in the first 2 quarters of 2019 before the price hike! wonder what the prices were for these when the availability was as you said!?!