27th Jun 2024 11:20
(Alliance News) - Watches of Switzerland Group PLC said it is cautiously optimistic about the year ahead, after the luxury goods sector has endured a difficult time in recent months.
For the year ended April 28, revenue was largely flat on-year at GBP1.54 billion. Pretax profit, however, fell 40% to GBP92.1 million from GBP154.8 million.
"I am proud of the performance that our team delivered this year in what was undoubtedly a more challenging market. We cemented our position as a leading international luxury watch and jewellery retailer and delivered further market share gains in both the UK and US, driven by our proven, differentiated business model. In particular, our US business went from strength to strength, growing 11% and will soon represent half of group sales," Chief Executive Officer Brian Duffy said.
Looking ahead, the luxury watches seller expects revenue of GBP1.67 billion to GBP1.73 billion for the new year.
It added: "Following the more challenging trading conditions of FY24, we are cautiously optimistic about trading in FY25. The industry as a whole is being more conservative on production, which we believe is a responsible approach to the long-term stability of the luxury watch market."
Investment bank Jefferies said investors should take "comfort" in WOSG backing its outlook.
Jefferies also noted that WOSG hinted at the UK market showing signs of stability.
"The switch from earnings downgrades to margin rebuild is the key focus in the year ahead. In this context management reiterates a cautious optimism at a time when the watchmaking industry as a whole is 'more conservative on production'," Jefferies added.
Shares in the company traded 11% higher at 443.60 pence each in London on Thursday morning. It is down 28% over the past 12 months, however.
The group's share price slumped back in August, following Rolex SA's agreement to purchase Swiss watch retailer Bucherer Ltd. It slumped more than 20% in late-August on the Rolex announcement. It led to fears that Bucherer would get better access to Rolex watches.
Watches of Switzerland, however, said the acquisition does not represent a strategic move into retail by Rolex, and there will be no change in the product allocation or distribution of Rolex watches.
Analysts at Peel Hunt commented: "We remain unconvinced about the impact of the Rolex-Bucherer situation on the equity story and maintain our hold recommendation."
By Eric Cunha, Alliance News news editor
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