Watches of Switzerland
on Thursday reported flat sales and a sharp drop in earnings in the first half of the year as its business was hit by the downturn in the global luxury goods market.
The watch and jewelry seller, a member of London’s FTSE 250 mid-cap index, reported a 2% uptick in sales on a constant currency basis to £761 million ($957 million) in the six months ending on Oct. 29.
The relatively flat sales were the result of a 4% dip in its U.K. and Europe division, which accounts for the bulk of group-wide revenues, which was partially offset by an 11% increase in U.S. sales.
The U.K.’s largest luxury timepiece retailer, in turn, reported a 16% drop in its statutory operating profits to £78 million, as higher costs eroded the company’s profit margins.
Shares in Watches of Switzerland increased 1% on Thursday having lost 30% of their value over the previous 12 months.
The watch seller blamed its flat sales on the “challenging” consumer environment in Britain, as it also said the closure of several of its British showrooms hit its U.K. and Europe arm’s revenues.
Firm-wide revenues also suffered due to a 15% drop in sales from its jewelry division, to £47 million, amid the wider global downturn in the market for luxury goods.
The decrease in jewelry sales was, however, offset by a 3% uptick in sales from its luxury watches arm, to £670 million, as demand for watches stayed buoyant, particularly in the U.S.
Watches of Switzerland also said it remains on track to meet its full-year guidance, as it prepares to reopen showrooms that were closed for refurbishment in the first half.
Looking forward, Watches of Switzerland, which was first established in London in 1924, is now aiming to grow its U.S. business, which currently accounts for two-fifths of its revenues.
The expansion will see the retailer, which first listed on the London stock exchange in 2019, open 19 new showrooms worldwide, including nine in the U.S.
The firm will also take control of 19 showrooms in the U.K. following a deal with British jeweler Ernest Jones to acquire the outlets in October.
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