- Falling sales in the UK offset strength in the US, where revenue grew 11%
Switzerland Group’s sales fell after “significant price increases” discouraged hard-pressed British shoppers, as “reduced consumer confidence” continues to hit discretionary spending.
The luxury retailer’s sales in the UK and Europe fell 5 per cent in the 52 weeks ended April 28 to £846 million, despite market share gains, which it said reflected “macroeconomic conditions in the United Kingdom”.
On Thursday, WOSG also blamed a “minimal return on tourist spending due to a lack of VAT-free shopping” in the UK, where e-commerce revenue also fell 11 percent from last year.
Britons call time on luxury spending as consumer pressure continues to weigh on demand
The group said it was “cautiously optimistic” about trading in the new financial year 2025 after reporting a 40 per cent drop in its statutory pre-tax profit to £92m.
Revenue growth of 11 per cent in US constant currency, to £692m, was not enough to offset a difficult year for the luxury retailer.
Profitability was hit by a “lack of leverage and headwinds from interest-free credit costs”, boss Brian Duffy said, while UK demand continued to lag its pandemic-era strength. .
Duffy said: “The UK luxury watch market is going through a period of normalization following the COVID boom, with consumers having more disposable income to spend on watches and jewellery.”
“High inflation and interest rates have resulted in an increase in the cost of living for the UK consumer and this, along with significant price increases, mainly due to the strength of the Swiss franc, from luxury watch brands , meant that the aspirational customer was more pressured and inclined to postpone purchases.
“The UK market is now almost entirely domestic, following the withdrawal of VAT-free shopping for tourists following Brexit, which has resulted in very low levels of overseas buyers.”
However, WOSG shares They rose 9.3 per cent to 436.6 pence by mid-morning on Thursday, reducing 2024 losses to around 35 per cent.
WOSG stock’s decline in 2024 was due to a profit warning in January when the company forecast “no recovery” in demand for the year.
Sophie Lund-Yates, senior equity analyst at Hargreaves Lansdown, said: “While some of the issues are outside the group’s control, tighter control of bids and pricing is something the market is looking for.”
WOSG said the UK market is “starting to show signs of stabilization” and the company predicts pressure on consumer spending will ease next year.
Maintained performance expectations for 2025.
WOSG said: ‘The industry as a whole is being more conservative in production, which we believe is a responsible approach for the long-term stability of the luxury watch market.
“FY25 guidance reflects current supply visibility of key brands and confirmed showroom refurbishments, openings and closures, and excludes acquisitions and uncommitted capital projects.”
WOSG expects to report 2025 revenues of approximately £1.7 billion next year, reflecting constant currency growth of 9 to 12 percent and profit margin expansion of 0.2 to 0.6 percentage points.
Duffy added: “I am proud of the performance our team achieved this year in what was undoubtedly a more challenging market.”
‘We consolidated our position as a leading international retailer of luxury watches and jewelery and achieved further market share gains in both the UK and US, driven by our differentiated and proven business model.