Luxury retailer Watches of Switzerland is continuing to feel the pinch from rich shoppers scaling back and the damage wrought by the so-called ‘tourist tax’.
In an update this morning, the Rolex seller said group revenue declined by one per cent to £397m in the third quarter, and in the UK and Europe it fell by seven per cent year-on-year.
Watches of Switzerland said cash cautious shoppers chose to spend their disposable income on clothing and makeup as opposed to designer watches.
The firm said it had seen “minimal” return of tourist trade in the UK thanks to the end of tax-free shopping for tourists, the so-called ‘tourist tax.’
The firm said this morning it was “encouraged” by the announcement of a review into the policy, with West End retailers, hoteliers and economists largely in agreement the revenue-raising move is in fact counter-productive, with tourists heading to European competitors to do big-ticket shopping.
However, some good news came from the US with revenues rising eight per cent to £175m.
The firm said it is gaining market share in the fragmented US luxury watch market and was bolstered by a partnership with American Express.
Today’s development comes just months after the luxury brand said it would lower its profit guidance by around £10m to £1.53bn.
At the time, chief Brian Duffy, described trading conditions as “volatile” and its shares plummeted by near 30 per cent following the news.
Analysts at Jefferies rated the firm a ‘Buy’ this morning.
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