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Shares in luxury watch retailer Watches of Switzerland plunged by 25 per cent on Thursday after the company became the latest luxury group to warn on profits.
Watches of Switzerland said it had “experienced a volatile trading performance in the run-up to and beyond Christmas”.
Chief executive Brian Duffy said that consumers had focused their festive spending on areas such as fashion, beauty, hospitality and travel.
Revenue for its financial year is now expected to be between £1.53bn and £1.55bn, down from previous guidance of £1.65bn to £1.7bn. The operating margin, previously expected to be in line with last year’s 10.7 per cent, is now predicted to be between 8.7 to 8.9 per cent.
The warning from Watches of Switzerland, which went public in 2019 with a market capitalization of £647mn, comes amid a broader slowdown for the luxury sector that boomed during the pandemic.
Analysts at Jefferies said that “the extent of the adjustments to the guidance range will be painful to navigate in the near term”.
The group was also buffeted last year after Rolex acquired rival watch retailer Bucherer, raising fears that the Swiss manufacturer could sell more of its watches directly to consumers.
Watches of Switzerland has been expanding aggressively in the US, which was a rare bright spot for the company in the weeks before and after Christmas. Sales in the US grew at a “double-digit” rate, the group said.