Watches of Switzerland: Shares crater 30 per cent as demand for luxury flattens
Shares in Watches of Switzerland have fallen by over 30 per cent after the luxury watch maker warned on its earnings for the year. .
In an update, the Rolex seller said that it was bruised by “challenging macroeconomic conditions” over Christmas which impacted consumer spending in luxury retail.
It now expects revenue for the full year to be in the range of £1.53bn to £1.55bn down from a guidance of £1.65-£1.70bn.
Brian Duffy, chief executive officer, said: “The festive period was particularly volatile this year for the luxury sector, with consumers allocating spend to other categories such as fashion, beauty, hospitality and travel.
“Whilst we are disappointed with this trend, we are encouraged by our market share gains in both the US and UK.”
He added: “We remain confident in the markets in which we operate, our model and the delivery of our Long Range Plan announced to the market in November 2023.”
“Few people sat round an open fire and exchanged Christmas gifts that included a fancy watch, judging by one of the leading timepiece sellers,” Russ Mould, investment director at AJ Bell, said.
“Watches of Switzerland continues to suffer from the downturn in the luxury goods market and a nice Rolex or fancy Omega were not in Santa’s sleigh a month ago.”
“Retail trends indicate consumers have prioritised experiences such as foreign holidays over big-ticket items in recent months and that has meant fewer people have given Watches of Switzerland the time of day,” he added.
“This has extended problems for the company which emerged last year where sales growth slowed and the watch market was flooded with second-hand timepieces, weighing on prices.”
The firm’s results mirror that of fellow designer retailers Burberry and Mulberry who have been impacted by wealthy shoppers putting a pause on spending.
While many luxury brands have blamed the tourist tax for their ailing sales, other factors including the major slowdown within the Chinese economy has also played a significant role.