Watches of Switzerland shares dropped by 14% in early trading today, despite another set of record quarterly results.
WoSG’s share price ended the day on Wednesday at around 1,000p, but dipped to 862p at the start of the trading day before recovering to over 930p by mid-morning.
Although there are natural concerns about an economic slowdown in Watches of Switzerland’s two main markets, the UK and United States, there was little in the results of the group’s third quarter to cause alarm, with sales rising by 17% to £407 million, year-on-year, and guidance for the full year turnover unchanged at £1.50 – £1.55 billion.
Q3 growth was slower than for the first nine months of the financial year, which was 25% up.
Shore Capital group analyst Eleonora Dani told the Financial Times this morning that the share price move could be explained by “potential softness” in its US jewellery sales, although jewellery makes up only 10% of the group’s revenue.
Today’s share price volatility should be seen in the context of a strong start to the year, with the company’s value rising by 11% since the start of the year.
Luxury watches, which account for 90% of sales, were still impacted by demand exceeding supply, the group reports.
E-commerce, which boomed during the early months of the pandemic, but cooled since, was still up by 5% YoY.
A significant gap in the group’s forward guidance is around Rolex’s roll out of a certified pre-owned programme.
That programme is being piloted with Watches of Switzerland rival Bucherer, in Europe, but Rolex has said it will roll out across its authorised dealer network.
Since analysts believe global sales of pre-owned watches will overtake those of new watches by the middle of the next decade, there is significant headroom for growth for groups like Watches of Switzerland.
In its latest quarterly update, WoSG merely says that “pre-owned continues to trade well delivering strong revenue growth in both the UK and the US”.
New and upgraded showrooms
WoSG continues its investment in new stores and refurbishments.
Upcoming projects including a new Watches of Switzerland flagship in New Jersey’s American Dream complex in April 2023, three monobrand boutiques opening in the UK and Europe, continuing roll out of Goldsmiths Luxury in the UK, an upgrade to a Mayors store in Dadeland, Florida, a third Watches of Switzerland showroom in Manhattan at One Vanderbilt anchored by Omega and Cartier, and the opening of a flagship Rolex Boutique on London’s Bond Street with around 7,000 sq ft of selling space.
