Watches of Switzerland, the largest luxury watch dealer in the U.K. (and the top seller of Rolex timepieces there), had its shares drop as much as 12 percent on Wednesday.
The company reported that its first-quarter sales will decline due to a challenging environment of the last six months that continued into the current fiscal year. (Watches of Switzerland operates mono-brand boutiques on behalf of brands like Breitling, Omega, and Tag Heuer.)
The company’s CEO Brian Duffy attributed the performance to late timing of product deliveries from brands. “More than half of our business is driven by supply and you can never predict the exact timing,” Duffy said, per Bloomberg, adding that it would be “misleading if people are focusing on that as any indication of the market or business overall.”
Still, the company expects sales growth to rebound in its second quarter with sales to rise for the entire fiscal year between £1.65 billion and 1.7 billion (about $2 billion and $2.12 billion). Duffy added that waitlists for certain in-demand models are continuing to grow.
Watches of Switzerland store openings this year include an Audemars Piguet boutique in Manchester as well as a Tudor store on London’s Old Bond street.
Despite the shares dropping, analysts agree that the company is still in a good position for long-term growth.
Barclay’s Richard Taylor said that the watch company’s “long-term opportunity remains significant to become a clear market leader in the U.S. and to capitalize on similar opportunities in Europe,” while Shore Capital Markets’ Eleonora Dani said they are “strongly positioned to sustain its growth trajectory … with sales returning to normal in the second quarter.”
The company, meanwhile, continues to focus on U.S., the biggest market for luxury timepieces. Last year, Watches of Switzerland sales in U.S. stores skyrocketed by 86 percent during a six-month period, from $206 million to $385 million, far outpacing markets in Europe.