Watches of Switzerland Group Plc rose after the top seller of Rolex watches in Britain saw a pickup in sales in its fiscal second quarter and reaffirmed its full-year financial guidance.
The stock climbed as much as 8.5 percent in London trading, paring its loss for this year to 26 percent. The shares tumbled earlier in the year when it warned of weaker-than-expected sales and profit.
“Watches of Switzerland has delivered sequential quarterly revenue growth improvement from -2 percent in 1Q to +11 percent in 2Q,” RBC analyst Piral Dadhania said in a note to clients. “The 2Q acceleration and 3Q current trading commentary confirms improving underlying trends.”
Luxury watches represented 83 percent of group revenue in the first half, and demand for key brands, which include Rolex and Patek Philippe, remains strong with continued waitlists, according to the company. It reiterated its yearly guidance of 9 percent to 12 percent sales growth.
In the fiscal first half, which ended in October, the company reported a 2 percent drop in luxury watch sales at constant currencies. Revenue was hurt by one-time increases in Rolex showroom stock levels “to enhance displays and client experience in the first quarter,” particularly in the US, Watches of Switzerland said in a statement.
Luxury jewellery sales doubled in the period when including revenue from the acquisition of distribution rights for the Roberto Coin brand in the US.
The company said Thursday it paid £10.9 million ($13.9 million) to acquire US watch enthusiast website Hodinkee during the first half. The company expects Hodinkee readership to drive visitors to its online sales website.
Watches of Switzerland said Rolex’s Certified Pre-Owned programme — where second-hand watches are certified as authentic by the watchmaker — is now the company’s second-biggest contributor to sales behind new Rolex watches.
By Andy Hoffman
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Watches of Switzerland Acquires Hodinkee
The deal aims strengthen the British company’s online presence in the US, leveraging Hodinkee’s strong editorial content despite the latter’s struggles in the used watch market.
