Watches of Switzerland Group Plc expects to more than double sales and profits by 2028 in a bullish projection for a company whose market value has plunged more than 40% this year amid fears of a luxury slowdown.
The top seller of Rolex watches in the UK said it was “stronger than ever,” even as sales of £379 million ($467 million) in its fiscal second quarter missed analyst expectations.
Watches of Switzerland rose more than 13% in early trading in London. The company’s stock had been sinking this year after investors reacted negatively to Rolex’s purchase of Swiss brand Bucherer AG with analysts warning there was a risk Rolex might start directing the supply of its watches away from the UK company. Rolex accounts for about half of Watches of Switzerland’s sales.
With its fresh long-term forecast, the company said Tuesday that it aims to surpass £3 billion in revenue while accelerating plans for new showrooms and increasing M&A activity.
Sales of used Rolex watches, sold as part of the Swiss watch giant’s “certified pre-owned” program, will also be a significant driver of sales in the future, accounting for 20% of new Rolex sales in the US and 10% in the UK by 2028.
“There is a hell of a lot to come on pre-owned,” Chief Executive Officer Brian Duffy said in an interview.
Watches of Switzerland also wants to bring its expertise in selling high-end watches to the luxury branded jewelry market where it sees growth potential.
The company said it’s still on track to hit its targets in the current year,with second quarter sales in the US growing by 11% at constant currencies while UK sales stayed flat as some stores were closed for renovations.
Duffy said that the company’s UK showroom upgrades will reopen before Christmas along with its US Rolex boutique in Orlando, Florida, which will help it meet annual sales targets.
The company is reassuring on two fronts with strong US sales growth in the short term and the long range plan “confirming the group’s confidence on securing an increasing share of volumes from key suppliers, including Rolex,” said Jefferies analyst James Grzinic in a note to clients.