Shares in Watches of Switzerland Group (LSE: WOSG) plummeted over 30% on Thursday after the retailer warned of a “challenging” festive trading period and downgraded its full-year guidance.
The stock crashed 32% to 420.20p by lunchtime after the luxury watch specialist said “volatile” Christmas sales and a continuation of “tough economic conditions” would impact performance.
In a trading update, Watches of Switzerland said while demand remained robust for top brands like Rolex and Cartier in the US, its UK business suffered amid weaker consumer confidence, sparking “an unusually high level of promotional activity”.
As a result, the company has adopted a more “cautious outlook” for the year to April 2024 and downgraded its revenue guidance to £1.53-£1.55bn from £1.65-£1.70bn previously.
Constant currency sales growth is now expected at 2-3%, down from 8-11% previously. Profit margin forecasts have also been cut to 8.7-8.9% from 10.7%.
Chief executive Brian Duffy said the trading volatility over Christmas was “disappointing” but said Watches of Switzerland had still managed to gain market share in both the UK and US.
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He remained confident in the long-term potential of the business, noting the “long range plan” announced in November to double sales and profits over the next five years.
But investors were rattled by the downgrade, sending shares down over 30% to their lowest level since 2020. Over the past year, the stock has plunged 58%.
The retailer will provide a more detailed trading update on 8 February covering its fiscal third quarter.