Rolex watches on display
Rolex retailer reiterated year-to-April 2024 guidance amid confidence over a return to more normalised growth rates / Image source: Adobe
  • Q1 sales decline less bad than feared
  • US progress impresses
  • Retailer returning to normalised growth rates

Rolex, Breitling and TAG Heuer timepiece seller Watches of Switzerland’s (WOSG) sales growth turned negative in the first quarter to 30 July 2023 as the luxury retailer lapped tough comparatives and suffered a 15% slump in high-end jewellery sales.

So why did the shares tick up 3.2% to 702.5p today?

Well, not only was the revenue decline better than expected with robust growth in the US lending support, there was relief as Watches of Switzerland reiterated its year-to-April 2024 guidance.

Management appears confident of a ‘return to more normalised growth rates in the balance of the financial year’ as comparatives ease.


Group sales were down 2% at £382 million in the first quarter, mainly due to a timing-related reduction in product intake in the UK and Europe which benefited the previous year’s fourth quarter.

Watches of Switzerland was also lapping strong prior year comparatives. Thankfully, revenues were underpinned by steady growth in the US, where sales ticked up 10% to £163 million, comfortably ahead of the 2.4% growth called for by consensus.

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While the first quarter got off to a sluggish start, sales gradually gained momentum and CEO Brian Duffy expects Watches of Switzerland to ‘return to more normalised growth rates in the balance of the financial year.’

He said: ‘Our full year guidance for another year of strong growth remains unchanged, underpinned by our supply visibility, client Registration of Interest lists and strong pipeline of showroom openings, refurbishment and investment, as luxury watch demand continues to outstrip supply.’

The FTSE 250 retailer is sticking with guidance for full year sales of between £1.65 billion to  £1.7 billion, implying year-on-year growth of 8%-to-11%, while Shore Capital sees the company clocking up a 13% increase in adjusted pre-tax profits to £175.3 million.


AJ Bell investment director Russ Mould commented: ‘Times may be tough but people are still buying expensive watches judging by Watches of Switzerland’s latest robust update. A market where demand is outstripping supply is never a bad one to be in and whether time is running out on the company’s strong run, for now it is ticking along very nicely indeed.’

Shore Capital pointed out Watches of Switzerland trades on a 2024 price-to-earnings ratio of around 13 times, which is roughly in line with the UK retail sector. But given its ‘strategic positioning within the luxury watch sector, characterised by unwavering demand and restricted supply’, the broker believes the stock ‘merits a premium valuation’ and says the upcoming catalyst will be a strategic update in the Autumn, during which the company ‘intends to unveil its ambitious growth plans through full year 2028’.

Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (James Crux) and the editor of the article (Steven Frazer) own shares in AJ Bell.


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Issue Date: 10 Aug 2023