WOSG Shares Down 46% This Year, Here’s Why

Watches of Switzerland (WOSG) shares have plunged a staggering 46% so far in 2024, leaving investors wondering if and when it can recover.

A combination of factors has contributed to the company's woes:

Disappointing Sales

In January,  WOSG revealed it had experienced headwinds during the critical Christmas trading period. 

“Despite a positive start to the early part of Q3 FY24, WOSG then experienced a volatile trading performance in the run-up to and beyond Christmas, as the challenging macro-economic conditions impacted consumer spending in the luxury retail sector,” the company said in its trading update at the time. 

The slump was attributed to challenging economic conditions that squeezed consumer spending on luxury goods like high-end watches.

It added that it expected the challenging conditions to remain for the balance of its fiscal year.

WOSG Revenue Guidance Cut

The weak sales performance forced WOSG to cut its full-year revenue forecast. The downward revision spooked investors and triggered a sharp sell-off, driving the share price significantly (-36%) lower.

Watches of Switzerland cut its full-year 2024 revenue guidance to between £1.53 billion and £1.55 billion, down from between £1.65 billion and £1.70 billion.

Competition Concerns

While WOSG is down significantly this year, it has also fallen 51% over the last 12 months. In August 2023, it experienced a sharp decline amid growing concerns that Rolex could be moving into direct competition with the company following its acquisition of Bucherer, a Swiss watch retailer.

It was feared that the shift in Rolex's sales strategy could significantly impact WOSG's profitability in the long run.

Analysts Remain Positive

Despite the headwinds and the stock's continued decline, analysts remain mostly positive, with four assigning the stock a Buy rating and two a Hold rating, according to TipRanks. The average price target is 507p, representing a potential 36% upside from current levels. 

Following WOSG's January trading update, Jefferies and Investec analysts reiterated Buy ratings on the stock.

Jefferies said it took the “unwelcome developments do not detract from WOSG's ongoing ability to grow share in its two key end markets.”

They added, “However, the extent of the adjustments to the guidance range will be painful to navigate in the near term.”