Shares of Watches of Switzerland Group (WOSG) have taken a significant hit, plummeting by over 28%, as investors are left disappointed by the company’s latest trading update. This sharp decline follows a downward trend in the luxury watch retailer’s shares, which have already decreased by more than 40% in the past six months, signaling a decline in growth.
Although the trading update did not provide specific figures, Watches of Switzerland Group revealed that its performance was marked by volatility during the latter part of the third quarter of fiscal year 2024. Particularly, the challenging macroeconomic conditions influenced consumer spending in the luxury retail sector, especially during the Christmas period. These adverse conditions are expected to persist for the remainder of the fiscal year.
Despite the precarious market landscape, Watches of Switzerland Group states that the demand for its key brands remains strong in both the UK and US markets. However, the UK market has faced more significant challenges, impacting luxury watch brands and non-branded jewelry. Additionally, the company has observed an unusually high level of promotional activity in the jewelry category.
As a result of these challenging conditions and consultations with key brands, Watches of Switzerland Group has revised its full-year guidance for fiscal year 2024, assuming no recovery in consumer demand. While CEO Brian Duffy expressed his disappointment in the trend, he also acknowledged the market share gains in both the UK and US.
The revised expectations now indicate that the company’s revenue for FY24 will fall between £1.53 billion and £1.55 billion, resulting in a 2% to 3% increase at constant exchange rates, compared to the previously predicted 8% to 11% rise. Moreover, the EBIT margin is anticipated to be between 8.7% and 8.9%, with total finance costs amounting to £6 million, surpassing the earlier projection of £5 million.
Links:
1. The Purpose of Investment – Forbes
2. The World’s Most Valuable Brands – Business Insider
