Swiss watches ‘on track’ to meet expectations amid luxury recovery

Watches of Switzerland said it is “on track” to meet its 2025 fiscal year guidance, thanks to a recovery in demand for luxury watches and jewelry.

The luxury retailer and largest seller of Rolex watches in the UK said trading in the first 18 weeks of the financial year was ‘in line’ with expectations.

The FTSE 250 company, which has 221 showrooms across the UK, US and Europe, said it had seen “a continued stabilisation in the UK market for both luxury watches and jewellery”.

After the update, Watches of Switzerland shares rose 4.78 percent to 394.4p on Tuesday afternoon.

WOSG expects to achieve a turnover of around £1.7 billion in 2025 next year. This equates to growth of 9-12 per cent at constant exchange rates and an increase in profit margin of 0.2-0.6 percentage points.

The news is a welcome boost for the Leicestershire company, whose share price has already fallen by around 40 percent in 2024.

The geopolitical tensions of the past year, the slowing global economy and persistent inflation have put pressure on consumers’ purchasing power.

As a result, luxury brands are facing declining demand as even the wealthy struggle to meet the high costs.

The impact of this was clearly visible in the June trading update, where the group reported that sales fell following ‘significant price increases’.

The company’s revenue in the UK and Europe fell 5 percent in the 52 weeks to April 28, to £846 million, despite market share gains, which the company said were due to “macroeconomic conditions in the UK”.

The company reported a 40 percent drop in statutory pre-tax profit to £92 million over the same period.

According to managing director Brian Duffy, profitability was impacted by a “lack of leverage and the headwind of zero-interest credit costs”, while UK demand continued to lag the strength of the pandemic.