Luxury timepiece retailer Watches of Switzerland Group soared on Tuesday as it announced improving sales momentum and divulged details of its new growth strategy.
At 570p per share, the Watches of Switzerland share price was up 9.8% and leading the FTSE 250 higher.
Revenues edged 1% higher during the 13 weeks to 29 October, to £379 million. Stripping out the impact of currency volatility sales were up 5% year on year.
The company said that “demand for luxury watches remains robust and continues to exceed supply,” with sales in the US rising 4% year on year to £165 million. This was up 11% at stable exchange rates.
In the UK and Mainland Europe turnover remained largely unchanged over the period, at £214 million.
For the first half of the financial year, group sales fell fractionally year on year at £761 million, while at constant currencies they were up 2%. Turnover in the US rose 5% (or 11% excluding currency-related effects), while revenues in Britain and the rest of Europe receded 4% on a reported and constant currencies basis.
Sales of luxury watches — which represent almost nine-tenths of group turnover — were flat during the six months to October, at £670 million, but were up 3% at stable currencies.
Luxury jewellery sales, meanwhile, were down 17% (or 15% at unchanged exchange rates) at £47 million. Watches of Switzerland said that the reversal “[reflected] market trends impacted by overall consumer sentiment and by a repositioning to full price sales in the US.”
The company kept its full-year estimates unchanged following those second-quarter numbers. Revenues are tipped to rise between 8% and 11% at constant currencies, to between £1.65 billion and £1.7 billion.
Chief executive Brian Duffy commented that “I am pleased to report an improved quarter two trading performance, notwithstanding the difficult consumer environment.”
He added that “our proven business model, the strength of our brand partnerships, international scale, bold marketing campaigns and dedication to exceptional client service, continues to drive the business forward.”
Watches of Switzerland also unveiled a new growth plan through which it hopes to more than double sales during the next five years.
By the end of financial 2028 it hopes to report sales above £3 billion, up from £1.5 billion in the last fiscal period (to April 2023).
Under the plans, the group will continue to upgrade and expand its global showroom network, it said, as well as seek out acquisitions. It plans to spend between £350 million and £500 million in the next five years to pursue this strategy.
Watches of Switzerland also plans to double-down on the sale of luxury branded jewellery and pre-owned watches over the period.
Duffy said that “we are excited by the opportunity available to us in the pre-owned market [and] particularly from the new Rolex Certified Pre-Owned programme, which we expect to deliver 20% of new Rolex in the US and 10% in the UK” by financial 2028.
Watches of Switzerland’s shares slumped in August after Rolex announced plans to enter the retail market by purchasing watch and jewellery seller Bucherer.