An employee arranges a display of Omega SA watches in the window of a Watches of Switzerland Group Plc store on Regent Street in London, UK, on Wednesday, Aug. 30, 2023. One of Watches of Switzerland Group Plc’s biggest investors cut its stake in the UK-listed timepiece retailer less than 24 hours after Rolex SA decided to buy a rival, Bucherer AG. Photographer: Jose Sarmento Matos/Bloomberg via Getty Images
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Watches of Switzerland posted strong gains Tuesday, after the U.K.-based luxury retailer reiterated plans to more than double sales and profits by the 2028 fiscal year.
Shares rose more than 13% in early trade and were 9.7% higher at 10:55 a.m. London time.
The firm on Tuesday reported a tick up in revenue to £379 million ($467 million) from £374 million in the most recent quarter. Sales of watches rose, while jewellery declined.
Half-year growth was strongest in the U.S. at 11% on a constant currency basis, versus a 4% decline in the U.K. and Europe.
The company reiterated full-year sales and profit guidance for fiscal 2024.
Investors reacted positively to an update on the business’ five-year plan, in which it said it was confident it could more than double sales and profits and accelerate new showroom projects and M&A activity.
CEO Brian Duffy said that the company saw opportunities in the pre-owned market, particularly in certified pre-owned Rolex watches, which it expects to account for 20% of Rolex sales in the U.S. and 10% in the U.K. by 2028.
It also plans to expand its “offer and leverage partnerships with US megabrands” in the luxury branded jewellery market.
The company’s share price has fallen 36% in the year to date, according to LSEG data.
The stock took a particular hit in August, after rival Rolex announced a deal to buy watch retailer Bucherer, fueling fears of an industry juggernaut taking more market share.
Watches of Switzerland share price.
Kate Calvert, equity retail analyst at Investec, said market reaction was due to the update containing “no new negatives” following the Rolex jitters, and that U.K. trading was positive while the U.S. saw a slight acceleration.
“Focus is on the updated five-year plan which is again confidently targeting a doubling in revenues, similar to [its] first plan, and should go some way to allaying market concerns,” Calvert said by email.