Shares in Watches of Switzerland (LON:WOSG) rose on Thursday after the luxury watch retailer, known for selling brands such as Patek Philippe and Cartier, released a promising full-year outlook forecasting increased revenues and profit margins.
Despite facing industry-wide challenges like inflation-driven drops in consumer demand and sluggish performance in the crucial Chinese market, Watches of Switzerland remains cautiously optimistic about its prospects for the current fiscal year.
“Trading conditions in our 2024 fiscal year have been more challenging,” the company acknowledged, “but we believe the industry’s conservative approach to production amid market volatility is essential for the long-term stability of the luxury watch market.”
The company now anticipates annual revenue to range between £1.67 billion and £1.73 billion, indicating growth of 9% to 12% at constant currencies. Additionally, Watches of Switzerland projects an improvement in its adjusted earnings before interest and tax (EBIT) margin by 0.2 to 0.6 percentage points.
Analysts at RBC Capital Markets noted that the updated guidance suggests a mid-point pre-tax profit of £153 million and an EBIT margin of 9.1%, surpassing consensus estimates. They also highlighted that the recent $130 million acquisition of U.S. jewelry brand Roberto Coin is expected to enhance the company’s pipeline of new stores.
The positive outlook and strategic expansion through acquisitions appear to bolster Watches of Switzerland’s position, driving investor confidence despite current market headwinds.
