Watches of Switzerland share price LON:WOSG was largely unchanged on a Q3 update that contained no new bad news and was even upbeat in parts
Watches of Switzerland published its Q3 trading update today which showed a mixed performance.
Highlights included solid trading over Christmas and the holiday period on both sides of the Atlantic with market share gain in both the UK and US.
Management said that overall Q3 performance was in line with its expectations and that momentum in the US is continuing.
On top of which it said it had observed market stabilisation in UK luxury watches and jewellery and that demand for its luxury brands remained strong especially when measured by registrations of interest for launches of new watches and limited edition timepieces.
In terms of forward guidance, revenue is now expected to come in at £102.0 million versus a consensus of £106.0 million, which traders at RBC called a small miss that reflected ongoing consumer headwinds.
Against that profit before tax should reach £24.0 million with the likelihood of improving margins.
However, there are still concerns about the residual values of second-hand luxury watches which anecdotal evidence suggests continue to tick lower.
Despite that, Watches of Switzerland is expanding and it is creating Rolex showrooms in Texas and Florida, as well as refurbishing the Rolex boutique on London’s Old Bond Street.
The firm currently has 217 showrooms split between the UK, Europe and the US. 95 of which are dedicated to a single brand be that Rolex, Omega, TAG Heuer, Breitling, Tudor, Audemars Piguet, Longines and others.
The share price has traded modestly lower on the announcement and there must be some concerns that President Trump may choose to impose tariffs on luxury watch brands, most of which are made in Europe or the EEA, which would knock the shine off the company’s performance in the US.
No alarms are ringing at the moment, but this must surely be a possibility.
Broker Shore Capital, whose retail analysts are well respected, said they were encouraged by the update but did not give the stock a rating or a target price and the firm has no plans to take up coverage of the stock.
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