Are volatile times over for Watches of Switzerland?
It appears the worst is now over for luxury retailer Watches of Switzerland, which has suffered volatility over the last 12 months.
The share price for Watches of Switzerland Group PLC – which sells renowned brands such as Rolex, Patek Philippe and Omega – is currently 387.81p.
But it has certainly experienced some volatility over the past year, due mainly to a slowdown in the broader luxury market, with prices ranging between 324p and 728p. The company is trading 20% above its May low but still significantly below its high peak in 2022, with a downward trend ever since.
However, the group has announced that following a challenging period, especially in the last financial year, it is now on track to meet 2025 guidance as the UK market has stabilised.
A FTSE-250 company, with a market capitalisation of £924.74m, the group plans to upgrade and expand its global showroom network including new stores in America.
Its ambitious growth plan, announced in 2023, aimed to more than double its sales over the next five years. By the end of the financial year 2028, the company targets sales exceeding £3 billion, a significant increase from the £1.5 billion reported in April 2023.
Bucherer
The retailer experienced a significant drop in its share price back in January, with more than £500 million wiped off its value in one day.
This decline was primarily triggered by Rolex’s announcement in October that it would acquire Bucherer – a major competitor of Watches of Switzerland, with more than 100 stores around the world.
Concerns were raised among investors that the acquisition would impact Watches of Switzerland’s ongoing relationship with Rolex with regard to access to expensive timepieces, for which long waiting lists showed demand remained strong. As a result, Watches of Switzerland’s stock price fell sharply.
Poor trading figures by Watches of Switzerland at that time were echoed by other major luxury retailers who voiced concern that high-end shoppers were holding back and spending money on travel, beauty and hospitality instead.
The warnings suggest the end of a surge in luxury spending that followed the pandemic lockdowns, during which wealthier individuals spent the money they had saved while holidays, dining out and events were all on hold – and all at a time when interest rates were also going through the roof.
Going forward
Watches of Switzerland is focused on expanding its presence in the US market and exploring other potential growth opportunities in Europe.
It continues to invest in its store network, e-commerce capabilities, and customer experience enhancements to maintain its position as a leader in the luxury watch retail industry.
The group allocated between £350 million and £500 million for its growth strategy over five years. If Watches of Switzerland can successfully expand its market presence and maintain strong sales growth, this could positively influence its share price.
Some analysts remain optimistic about Watches of Switzerland’s growth prospects, given its strong brand partnerships, market position, and expansion plans. If the company can deliver on its strategic initiatives, the share price could see upward momentum. Conversely, any delays or failures in executing its plan could lead to negative sentiment among investors.
Time for a new watch?
As always, Luxe Watches is here to listen to your desires for luxury watches. Rolex, Cartier and Patek Philippe are just a few of the fabulous brands we have on offer here in Epping.
If you have a watch in mind, our sales team would love to assist.