(Bloomberg) -- Watches of Switzerland Group Plc shares soared the most since June after the top seller of Rolex watches in Britain saw a pickup in sales and reaffirmed its full-year financial guidance.
The stock climbed as much as 14% in London trading, paring its loss for this year to about 21%. The shares tumbled earlier in the year when it warned of weaker-than-expected sales and profit.
Chief Executive Officer Brian Duffy said UK luxury watch consumption had stabilized following a crash worsened by brand price hikes and a cost-of-living squeeze. In the US, which accounts for more than 40% of sales, shoppers seeking out ultra-premium watches from top brands were more active following the US election.
“The US is not a soft landing or a hard landing — it’s kind of a no landing,” Duffy said in an interview with Bloomberg News. “The market has continued strong.”
Analysts highlighted the retailer’s momentum after a difficult fiscal first quarter where it restocked shelves, particularly in the US, with Rolex watches.
“Watches of Switzerland has delivered sequential quarterly revenue growth improvement from -2% in 1Q to +11% in 2Q,” RBC analyst Piral Dadhania said in a note to clients. “The 2Q acceleration and 3Q current trading commentary confirms improving underlying trends.”
Luxury watches represented 83% of group revenue in the fiscal first half, and demand for key brands, which include Rolex and Patek Philippe, remains strong with continued waitlists, according to the company. It reiterated its yearly guidance of 9% to 12% sales growth.
In its first half, which ended in October, the company reported a 2% drop in luxury watch sales at constant currencies. Revenue was hurt by one-time increases in Rolex showroom stock levels “to enhance displays and client experience in the first quarter,” particularly in the US, Watches of Switzerland said in a statement.
Luxury jewelry sales doubled in the period when including revenue from the acquisition of distribution rights for the Roberto Coin brand in the US.
The company said Thursday it paid £10.9 million ($13.9 million) to acquire US watch enthusiast website Hodinkee and its watch insurance business during the first half. Hodinkee sold the intellectual property rights to its online retail sales business Crown & Caliber separately to another watch dealer for less than $1 million, people familiar with the transaction details said previously. Watches of Switzerland expects Hodinkee readership to drive visitors to its online sales website.
Watches of Switzerland said Rolex’s Certified Pre-Owned program — where second-hand watches are certified as authentic by the watchmaker — is now the company’s second-biggest contributor to sales behind new Rolex watches.
(Updates with CEO comments beginning in third paragraph three and further details on Hodinkee sale)
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