- Strong demand in UK and US
- UK luxury watch market stabilised
- On track to deliver FY25 guidance
While the broader global luxury market continues to slow, Watches of Switzerland (WOSG) believes the market for high-end timepieces and jewellery has bottomed out in the UK.
Shares in the Rolex, Patek Philippe and Audemars Piguet purveyor rallied 11.3% to 419p on a reassuring trading update in which the FTSE 250 company confirmed it is on track to deliver its full year 2025 guidance.
TICKING ALONG NICELY
Watches of Switzerland said trading for the first 18 weeks of the financial year has been in line with its expectations and assured investors demand for its key luxury brands remains strong in both the UK and US markets, outstripping supply.
There was huge relief as the company called out ‘continued stabilisation of the UK market’ in both luxury watches and jewellery, with new exclusive David Yurman and Repossi launches to come in the UK.
Readers will recall weak UK luxury market demand was the key catalyst for the big earnings miss delivered by Watches of Switzerland at the turn of the year which has left the share price down 35% on a one year view.
Investors were also rattled last summer after Rolex agreed to buy retail partner Bucherer in a surprise tie-up which threatened to bring Watches of Switzerland rival Bucherer better access to Rolex watches.
UPSIDE STATESIDE
Encouragingly, Leicester-headquartered Watches of Switzerland is building US stocks ahead of what it believes will be a stronger second half of the financial year.
The Brian Duffy-bossed group added that the integration of Roberto Coin, the Italian luxury jewellery brand acquired in May, is progressing to plan and it has exciting growth plans for the brand in the US market.
Russ Mould, investment director at AJ Bell, said Watches of Switzerland’s confidence that the worst is over for the luxury watch market is backed up by plans for the roll-out of more stores and the setting of a March 2025 date for the opening of a flagship store on London’s Old Bond Street.
This opening has been pushed back twice already.
‘There are still risks on the horizon - not least a Budget next month which has promised to put the burden on those with the broadest shoulders,’ said Mould.
‘This could have a dampening effect on demand for luxury goods. While the threat has not materialised yet, Rolex’s decision to acquire Swiss watch retailer Bucherer could see it limit the amount of product the manufacturer sells through third parties like Watches of Switzerland.
‘The integration of Roberto Coin - which has the exclusive rights to distribute the eponymous Italian jewellery across North America, the Caribbean and Central America - is said to be going well and will help to diversify Watches of Switzerland’s exposure.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Martin Gamble) own shares in AJ Bell.
