Watches of Switzerland issues profit warning despite ‘strong’ demand

Watches of Switzerland has outlined a more “cautious” outlook for the fiscal year of 2024 after it said it was expecting “challenging conditions” to continue for the remainder of the period.

This comes despite a positive start to the early part of Q3 FY24, the company noted, after which it then went on to see a “volatile trading performance in the run-up to and beyond Christmas”.

It cited the current macroeconomic conditions as the cause of lacklustre performance in the luxury retail industry, as well as an “unusually high level of promotional activity in non-branded jewellery”.

As such, the company has lowered its profit guidance for the period to be between 1.53 billion and 1.55 billion pounds, down from the previously reported 1.65 billion and 1.70 billion pound range.

It has further lowered its constant currency revenue growth from being between 8 to 11 percent to 2 to 3 percent, while its EBIT margin is now expected to be in the range of 8.7 to 8.9 percent.

Much of the impact seen at the company had been in the UK, where the market was more challenging. Meanwhile, in the US, sales “remained strong with continued double-digit growth”.

In a release, Brian Duffy, CEO, 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. Whilst we are disappointed with this trend, we are encouraged by our market share gains in both the US and UK.”