Top Rolex seller sees signs of stability in UK watch market

Watches of Switzerland Group Plc said it sees signs of stability in the premium and luxury watch market in the UK after a post-Covid slump dented sales.

Shares of the top seller of Rolex watches in Britain rose as much as 9.7% in London after the company said pressures on demand for expensive timepieces suffered this year are starting to wane.

Sales in the UK and Europe fell 5% in fiscal 2024 as consumer confidence was hit by shaky economic growth, high interest rates and conflicts in Ukraine and the Middle East. The luxury watch retailer now sees those pressures easing, and reiterated its sales forecasts for the current year in a statement on Thursday.

Investors “should find comfort” in the company’s unchanged forecast, Jefferies analyst James Grzinic said in a report. “Signs of stabilization in the UK market will be an area of focus today.”

Adjusted earnings before interest, taxes, depreciation and amortization fell 11% to £179 million ($226 million) for the year ended in April as US stores and sales of used Rolex watches outperformed. That topped consensus analyst estimates of £175 million.

The company’s shares had fallen more than 40% this year on concerns it could lose market share after Rolex bought rival watch retailer Bucherer AG, marking the top Swiss brand’s first significant move into selling its own products.

Watches of Switzerland said sales of used watches, including Rolex models under the Swiss watchmaking giant’s “certified pre-owned” program, doubled in its fourth quarter from the prior year and are now its second-biggest source of revenue. 

As for new watches, the company said Swiss watchmakers are “being conservative” with production amid slowing demand to avoid flooding the market with too many timepieces. 

This is a “responsible approach to the long-term stability of the luxury watch market,” the company said.

Watches of Switzerland warned earlier this year that sales and profit would be weaker than anticipated as it wasn’t allocated as many gold and other precious-metal watches from Rolex and as UK consumers turned more cautious.

The company on Thursday also reiterated its long-term target of more than doubling sales and earnings before interest and taxes by 2028.