Watches of Switzerland hails signs of recovery in luxury market

Britain’s biggest seller of Rolexes and Omega watches has signalled a recovery in the luxury sector as demand steadies for high-end timepieces and jewellery.

Shares in Watches of of Switzerland, which also sells high-end brands Cartier and Tag Heuer, rose by as much as 6 per cent after it welcomed a “continued stabilisation” of the UK market following a period of “challenging macroeconomic conditions”.

The FTSE 250 retailer said that trading had been in line with expectations in the first 18 weeks of the financial year. It also confirmed that it was on track to meet its full-year guidance.

The Watches of Switzerland group is Britain’s largest luxury watch retailer, operating 221 showrooms in the UK, United States and Europe. It also operates brands including Mappin & Webb, Goldsmiths and Betteridge.

The group has suffered during the wider downturn in luxury retail spending. Shares in the business have fallen 45 per cent this year after it warned in January that it had experienced “volatile trading” in the run-up to the Christmas trading period.

The retail chain reported statutory pre-tax profits of £92 million for the year to April 28, compared with £155 million previously.

Demand across the global luxury goods industry has slowed since a post-pandemic boom. The $350 billion industry has reported waning demand in the US, China and Europe, where rising prices prompted people to reduce their spending.

British retailers including Mulberry, Burberry, Selfridges and Harrods have also blamed a decline in sales on the scrapping of VAT-free shopping for overseas tourists. Brian Duffy, chief executive of Watches of Switzerland, said that the absence of the incentive “meant that the UK and therefore the group didn’t enjoy what had been an upturn in the market of tourism returning”.

Watches of Switzerland said it was nevertheless “cautiously optimistic” about the 2025 financial year. The group has forecast revenue growth of between 9 to 12 per cent on a constant currency basis, with sales expected to climb to between £1.67 billion and £1.73 billion.

That was based on “current trading, confidence of supply in both markets and increased certainty on the timing of key showroom projects”, it said.

The company said that demand for its key luxury brands, particularly on “registration of interest” lists, remained strong in both the UK and US markets, outstripping supply. However, it expected US growth to be weighted to the second half.

Watches of Switzerland is sharpening its focus on expanding further in America following increased demand. It is negotiating new single-brand shops alongside concession models with department store partners.

The retailer also plans to grow and develop the Roberto Coin jewellery business. Watches of Switzerland acquired the distribution rights for the brand in May for its North American markets, including the US, Canada, Central America and the Caribbean.

Analysts at Investec said the market “should welcome comments that continued market stabilisation was seen through the period and the registration of interest list remains strong”.

RBC Capital Markets said it believed the “depressed investor sentiment overhang and fears around Rolex’s distribution future can be rectified through a stable earnings outlook and further merger and acquisitions.” It added that data on Swiss watch exports appeared to be stabilising, particularly for US and UK regions, which are key markets for Watches of Switzerland.

Shares in Watches of Switzerland rose by 23¾p, or 6.3 per cent, to close at 400¼p.