Watches of Switzerland’s Q3 Sales Dip Due to ‘Tough’ Holiday Season

FinancialsFeb 08, 2024

Watches of Switzerland’s Q3 Sales Dip Due to ‘Tough’ Holiday Season

While sales rose in the U.S. market, demand for watches and jewelry was slow in the U.K.

Watches of Switzerland store in the Mall of America
Watches of Switzerland’s store in the Mall of America in Bloomington, Minnesota. The company reported declining sales in the third quarter, with holiday sales lower than expected.
London—Watches of Switzerland posted declining sales in its third quarter following a difficult holiday season.

The retailer had warned of a potential sales dip in a trading update last month and lowered its full-year guidance.

While it had a positive start to Q3, which includes the months of November and December, it described conditions as “volatile” around Christmas.

“Trading in the run-up to and beyond Christmas was tougher than originally expected, particularly in the U.K. amidst slower demand for luxury discretionary purchases,” said the company.

For the third quarter ending Jan. 28, the company posted £397 million ($500.2 million) in total revenue, down 3 percent year-over-year at actual rates and 1 percent at constant currency rates.

For the first nine months of the year, revenue totaled £1.16 billion ($1.46 billion), down 1 percent year-over-year at actual rates and up 1 percent at constant currency rates.

The company’s luxury jewelry category struggled, with sales growth in luxury branded jewelry offset by a weaker performance in its non-branded jewelry segment.

Revenue in the category was down 18 percent in the quarter (down 16 percent at constant currency rates) and down 17 percent in the first nine months (down 15 percent at constant currency rates).

Luxury watches account for the majority of Watches of Switzerland’s revenue, up to 85 percent from 84 percent in the prior Q3.

Quarterly sales in the luxury watches category slipped 1 percent year-over-year (up 1 percent at constant currency rates) while sales in the first nine months were flat (up 2 percent at constant currency rates).

Watches of Switzerland’s “services/other” segment saw growth, up 4 percent in the quarter (up 5 percent at constant currency rates) and up 5 percent in the first nine months (up 6 percent at constant currency rates).

E-commerce sales fell 15 percent at actual rates, impacted by the mix of products and the U.K. market’s performance, said the company. 

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In the United States, sales were strong across all regions, it said, as it gains market share in the fragmented luxury watch market.

Watches of Switzerland’s U.S. revenue grew 3 percent year-over-year in Q3 (up 8 percent at constant currency rates). For the first nine months, U.S. sales grew 5 percent year-over-year (up 10 percent at constant currency rates).

Looking ahead, the company said it expects the challenging conditions to continue through the end of its fiscal year.

Watches of Switzerland’s full-year revenue is expected to range between £1.53 billion and £1.55 billion ($1.94 billion to $1.97 billion), down from its prior guidance of £1.65 billion to £1.7 billion ($2.1 billion to $2.16 billion).

Constant currency revenue growth is forecast at 2 to 3 percent, down from 8 to 11 percent.

As of Jan. 28, Watches of Switzerland had 222 showrooms across the U.S., U.K., and Europe, up from 211 in Q2.

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