Financial basis

Swiss watches more cautious after a good first quarter

A branch of Watches of Switzerland is seen in London, Britain May 30, 2019. REUTERS/Toby Melville

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  • CEO says there should be an element of caution
  • Forecasts revenue of stg 1.45 billion-1.50 billion for the current year
  • The group’s plan increased by 25% to 391 million stg in 13 weeks to July 31

ZURICH, Aug 16 (Reuters) – Luxury watch retailer Watches of Switzerland (WOSG.L) expects a potentially tougher trading environment in the second half of its current financial year, it said on Tuesday, as difficult economic conditions are impacting spending habits.

“We’re not really worried because a lot of our business is supply driven,” chief executive Brian Duffy told Reuters in an interview. “But we can’t ignore that the world is concerned about the economy, the cost of living, inflation. It will impact consumer sentiment.”

“We are quite confident, but it is appropriate that we introduce an element of caution,” added Duffy.

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Retailer Rolex, which has long waiting lists for shortage watches, has confirmed it expects revenue of between 1.45 billion pounds ($1.8 billion) and 1.50 billion for its exercise until April 2023.

In the 13 weeks to July 31, the group’s revenue rose 25% at constant exchange rates to 391 million pounds, said the company, which makes around two-thirds of its sales in Britain and a third in the United States, in a commercial update.

Duffy said the group did not face significant inflation on its cost base – mainly store rents and salaries – but the brands had imposed additional price increases this summer, in addition to the 4% to 5% announced earlier this year, taking the annualized rate. increase to around 7%.

He said the group’s expansion into mainland Europe is going well. She recently opened a boutique in Stockholm and is planning other openings in Scandinavian countries in the coming months.

Shares of Watches of Switzerland rose 3.3% to 913.67 francs at 09:01 GMT, after hitting 946.5 francs, their highest in more than two months.

($1 = 0.8305 pounds)

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Reporting by Silke Koltrowitz; Editing by David Holmes

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