Time is ticking down until Watches of Switzerland reports its Q1 trading update on Wednesday, following on from its record FY23 results.

Yet, despite its strong results, WOSG shares have fallen 14% this year as consumers now have less disposable income to spend due to soaring inflation and higher interest rates impacting households. This followed a period of extreme demand during the pandemic, where the market experienced a boom.

Reports state that prices for second-hand luxury watches are near a two-year low. However, while Business Insider said in April that “the frenzy for new Swiss luxury watches is softening from its pandemic peak, they added that it only means “waitlists are slightly shorter.”

WOSG’s recent results showcased a strong year of results, with record revenue of £1.54bn, up 25% year-on-year. US revenue jumped 52% as the group continued its strong momentum in this field.

Meanwhile, statutory profit before tax of £155m was up 23% YoY. The group has focused on expanding its showrooms internationally, adding a total of 28 across the UK, the US and Europe.

The group’s FY24 guidance was left unchanged, suggesting the firm remains confident despite the current economic headwinds. Revenue is anticipated to grow between 8-11%, implying demand is still robust and WOSG’s share price has room to grow over the long term.

However, given the reported slowdown, the big risk is the economic conditions continuing to filter into the luxury market. Some consumers may put off larger purchases until economic sentiment improves.

Jamel Boughedda