Watches of Switzerland has issued a profit warning as shares plummeted by more than 25% this morning. In the run-up to Christmas, consumers opted to spend on fashion, beauty, travel and hospitality rather than luxury.
Watches of Switzerland said today that it experienced a “volatile trading performance” in the lead-up to Christmas as consumer spending across luxury goods was impacted by the ongoing “challenging macroeconomic” environment.
The luxury watch retailer added that it expects the “challenging” conditions to remain for the rest of the year.
Watches of Switzerland said demand across its key brands in both the UK and the US “continued to be strong” and sales in the US saw double-digit growth.
Despite this, sales of a range of the retailer’s luxury watch brands and other non-branded jewllery in the UK were “more challenged” than others.
Watches of Switzerland said it also saw an “unusually high” level of promotional activity across its non-branded jewellery during the trading period.
Revenue for the full year is now expected to be between £1.53bn and £1.55bn, down from the previously stated guidance of between £1.65bn and £1.7bn, assuming there is “no recovery” in consumer demand.
EBIT margin for the full year is anticipated to be between 8.7% and 8.9%, rather than the previous guidance in line with the 2023 full-year margin.
Watches of Switzerland chief executive Brian Duffy said: “The festive period was particularly volatile this year for the luxury sector, with consumers allocating spend to other categories, such as fashion, beauty, hospitality and travel.
“While we are disappointed with this trend, we are encouraged by our market share gains in both the US and UK.
“I would like to thank our colleagues for continuing to provide high-quality service and support to our clients against this challenging backdrop.
“We remain confident in the markets in which we operate, our model and the delivery of our Long Range Plan announced to the market in November 2023.”