Watches of Switzerland’s Jewelry Sales Sink in Q2

FinancialsNov 08, 2023

Watches of Switzerland’s Jewelry Sales Sink in Q2

Sales of pre-owned watches, however, grew 80 percent following the company’s rollout of the Rolex Certified Pre-Owned program.

Watches of Switzerland store in the Mall of America
Pictured here is Watches of Switzerland’s store in the Mall of America in Bloomington, Minnesota. Watches of Switzerland CEO Brian Duffy described the consumer environment as “difficult” in the first half of 2023.
London—Watches of Switzerland had a rough first half of the year, with jewelry sales down double digits and watch sales virtually flat.

CEO Brian Duffy pointed to a “difficult consumer environment” as the company released its second-quarter results Tuesday, while adding that several of the company’s Mappin & Webb showrooms in the United Kingdom have been closed for upgrades though they are set to reopen before the holiday season.

Pre-owned watch sales, however, were a bright spot on Watches of Switzerland’s balance sheet, up 80 percent year-over-year in the second quarter.

Duffy noted a positive response to the company’s rollout of the Rolex Certified Pre-Owned program, launched in the United States in July and in the U.K. in September.

For the second quarter ending Oct. 29, the company posted £379 million ($466 million) in total revenue, up 1 percent year-over-year at actual rates, though up 5 percent at constant currency rates.

In the U.S., Watches of Switzerland’s revenue grew 4 percent (11 percent at constant currency rates) in Q2, totaling £165 million ($203 million).

For the first half of the year, Watches of Switzerland’s total revenue was £761 million ($936 million), flat year-over-year (up 2 percent at constant currency rates).

E-commerce sales slipped 4 percent, which the company attributed to tough comps and the overall drop in jewelry sales.

In the U.S., first-half revenue totaled £328 million ($403 million), up 5 percent year-over-year (up 11 percent at constant currency rates).

“We sustained strong momentum in the U.S,” Duffy said.

The luxury jewelry category struggled with revenue down 18 percent in the quarter (down 16 percent at constant currency rates) and down 17 percent in the first half of the year (down 15 percent at constant currency rates).

“This reflects market trends impacted by overall consumer sentiment and by a repositioning to full-price sales in the U.S.,” said the company.

Looking at watches, quarterly sales in the luxury watches category rose 3 percent year-over-year (up 6 percent at constant currency rates) while first-half sales in the category were flat (up 3 percent at constant currency rates).

“Demand for luxury watches remains robust and continues to exceed supply, with consistent additions to and conversions of the client ‘Registration of Interest’ lists, and average selling prices continuing to increase,” said Duffy.

Watches of Switzerland’s “services/other” segment saw solid growth, up 8 percent in the quarter (up 9 percent at constant currency rates) and up 6 percent in the first half (up 7 percent at constant currency rates).

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Looking to the year ahead, the company plans to continue expanding and revamping its store network.

It announced Tuesday that it has acquired 19 luxury watch showrooms from Ernest Jones, a Signet Jewelers-owned, U.K.-based brand—14 multi-brand showrooms and five mono-brand boutiques.

Ernest Jones operates about 180 locations, as per Signet Jeweler’s website.

The price of the acquisition, expected to be finalized this month, was not disclosed.

As of Oct. 29, Watches of Switzerland had 211 showrooms across the U.S., U.K., and Europe.

The company maintained its fiscal-year sales and profit guidance, anticipating sales of £1.65 billion to £1.7 billion ($2.03 billion to $2.09 billion), meaning growth of 8 to 11 percent at constant currency rates.

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