Key Takeaways
Watches of Switzerland Group PLC (LSE:WOSG) surged 14% after forecasting annual profit above expectations, fueled by wealthy American shoppers snapping up luxury timepieces from brands like Rolex and TAG Heuer.
"The higher income cohort in the U.S. is clearly feeling good about their wealth," Brian Duffy, Watches of Switzerland's chief executive officer, said in a statement. "The positive consumer sentiment around that clearly is benefiting the luxury watch and jewellery category."
The luxury retailer said revenue for the year ended May 3 rose 13% at constant currency to £1.83 billion ($2.48 billion). On the back of the improved sales, the group now expects adjusted earnings before interest and taxes between £152 million and £155 million, ahead of the £148.2 million consensus. Shares jumped as much as 15% to 608 pence in London trading, their highest in over two years.
The United States has overtaken Britain as the company's primary revenue source, with sales growing 24% in constant currency to $1.24 billion. The US market now accounts for more than half of total group sales, a shift aided by a surge in US stock markets that has bolstered confidence among affluent buyers. Analysts at RBC Capital Markets noted that while the industry is cyclical, the business appears to be stabilizing, with strong US growth offsetting flatter performance in the UK.
The performance comes as a bright spot in a luxury sector that has faced a broad downturn in recent years following a post-pandemic boom. While Watches of Switzerland's stock is still down more than 60% from its early 2022 peak, the latest results have provided a significant boost. The company said it started its 2027 fiscal year with confidence and strong momentum, targeting organic revenue growth between 5% and 10%.
The guidance suggests management is confident that demand from top-tier consumers will remain resilient. Investors will watch the company's full results on July 14 for a broader update on its growth strategy and margin outlook.
This article is for informational purposes only and does not constitute investment advice.
