City reaction: Watches of Switzerland maintains full-year guidance after Q3 sales uptick

High-end timepiece and jewellery retailer Watches of Switzerland has maintained its full-year guidance after unveiling “strong” third-quarter figures.
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The group saw revenue for the 13 weeks to January 29 – including the key festive period – reach £407 million, a 17 per cent year-on-year jump at reported rates, with 84 per cent of the total coming from luxury watches, “where demand continues to exceed supply”, and which grew by more than a fifth to reach £340m. Sales in the UK and Europe were up 7 per cent to £238m, and the US market jumped by more than a third to £169m.

“It was a good quarter as far as we were concerned,” Glasgow-born chief executive Brian Duffy told The Scotsman, saying such progress came against the difficult economic backdrop as well as travel and postal strikes.

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“Things remain good… demand’s good, we continue to add to our waiting list,” he said, also stating that the firm is “still comfortable about the guidance that we’ve pretty much been giving since the start of our fiscal year”. It reiterated in the latest results that it expects full-year revenue to come in at £1.5 billion to £1.55bn, and adjusted earning before interest and tax to be in the £163m to £175m bracket.

The group saw 84 per cent of Q3 sales coming from luxury watches. Picture: Jared Siskin/Getty Images for Watches Of Switzerland.The group saw 84 per cent of Q3 sales coming from luxury watches. Picture: Jared Siskin/Getty Images for Watches Of Switzerland.
The group saw 84 per cent of Q3 sales coming from luxury watches. Picture: Jared Siskin/Getty Images for Watches Of Switzerland.

Mr Duffy expressed surprise at the group’s share price falling in the wake of the results, at one point dropping to a low of 837.76p, having opened at 929.93p, and closing at 895p. He has also previously flagged Edinburgh’s Multrees Walk/the St James Quarter as an area in which it could expand, and now says it is “progressing discussions”.

In terms of its outlook, Watches of Switzerland said: “We believe the strength of the luxury watch and jewellery categories, the unique supply/demand dynamics of luxury watches and client registration lists, our portfolio of leading brand partnerships, and the success and agility of our model will continue to support long-term sustainable sales growth.”

Shore capital analysts Eleonora Dani and Clive Black branded the results “strong”, although added that the group’s shares are down 22 per cent over the past year, despite a 20 per cent year-to-date increase. They also stated: “The company's potential growth trajectory in the fragmented US and EU markets, combined with its well-executed strategy, makes the shares an attractive investment opportunity, in our view.”

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