The Watches of Switzerland Group PLC (LON: WOSG) share price crashed 31.8% after a trading update regarding its current 2024 financial year. The company noted that due to the challenging Christmas period for luxury goods, it had to lower its financial guidance for the year.
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The early phase of Q3 FY24 showed promising signs for WOSG, but the period leading up to and after Christmas was marked by unpredictable trading patterns. The fluctuation was primarily due to challenging macroeconomic factors that affected spending in the luxury retail segment.
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Given these conditions, it is now anticipated that the remainder of the fiscal year will continue to be challenging. There is still a robust demand for our flagship brands in the UK and the US, evidenced by growing numbers on the Registration of Interest lists. The US market, in particular, maintained its strength with consistent double-digit sales growth.
However, the situation in the UK was less favourable, affecting many luxury watch brands and non-branded jewellery. Notably, there was a significant increase in promotional activities in the non-branded jewellery sector.
Considering these recent difficult trading conditions and adopting a more conservative perspective for the rest of the fiscal year, the management team has revised its full-year forecast for FY24. The company lowered its revenue expectations from £1.65 – £1.70 billion to £1.53 – £1.55 billion.
The updated guidance considers current trends without expecting a rebound in consumer demand and includes insights from discussions with our key brand partners.
Brian Duffy, Chief Executive Officer, said: “The festive period was particularly volatile this year for the luxury sector, with consumers allocating spend to other categories such as fashion, beauty, hospitality and travel. Whilst we are disappointed with this trend, we are encouraged by our market share gains in both the US and UK. I would like to thank our colleagues for continuing to provide high-quality service and support to our clients against this challenging backdrop. We remain confident in the markets in which we operate, our model, and the delivery of our Long Range Plan announced to the market in November 2023.”
Watches of Switzerland (WOSG) share price.
The Watches of Switzerland share price crashed 31.82% to trade at 399.9p from Wednesday’s closing price of 586.5p.
On Friday, analysts at Societe Generale downgraded shares of the company to Hold from Buy, with a 418p per share price target.
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