Watches of Switzerland Interim Results Show Strong Performance
WoS confirms full FY25 growth forecast thanks to strong results on pre-owned segment (CPO)
While in previous articles we discussed a slowing watch market, the half-year results recently presented by Watches of Switzerland Group (WoS) offer a more positive scenario. While giants like Richemont and Swatch Group face the challenges of weaker demand, WoS shows quite positive signs with revenues increased from £761 million to £785 million for the group's H1, but operating profit dropped by 23% to £60 million.
This is not just my opinion, but investors are thinking the same, since after the results were announced the stock on the stock market spiked from £4.99 to £5.70 between December 4 and 5.
The Success of the Rolex CPO
One of the drivers of these results can be attributed to the certified pre-owned program introduced by Rolex. The first half of fiscal year 2025 (H1 FY25) saw the consolidation of the Rolex Certified Pre-Owned (CPO) segment as a major growth driver for Watches of Switzerland Group.
Launched in 2023, the Rolex CPO program is distinguished by its focus on quality and certification. Every watch sold through this channel is authenticated and accompanied by an official Rolex warranty, offering customers unparalleled security in the pre-owned market. In the first half of the fiscal year, the program expanded significantly and now has 19 showrooms in the United States and 24 in the United Kingdom offering Rolex CPO. All of the showrooms in the U.S. offer second-wrist Rolex CPO along with new watches, while in the U.K. about three-quarters of the stores do so.
Certified pre-owned Rolex is experiencing incredible success, as CEO Brian Duffy emphasized in the conference call presenting the results:
Rolex CPO business has grown by 50% in H1 and is now Watches of Switzerland’s second biggest brand, after new Rolex watches.
Wos Overall Performance
Luxury watches account for 82% of the group's revenue of which 71% is made up of the top 8 luxury brands for WOS: Rolex, Patek Philippe, Audemars Piguet, Omega, Cartier, Breitling, TAG Heuer, Tudor.
However, we note a slight decline in sales of 3% in the first half of the year, attributable to a one-time increase in showroom inventory in Q1 designed to improve the customer experience. In Q2, this strategy began to pay off, with U.S. sales growth of 24% in constant currency.
The U.K., while showing signs of weakness in Q1, returned to growth in Q2 thanks to recovering demand, particularly, the report points out, for premium brands such as Rolex, Patek Philippe, and Audemars Piguet. Watches of Switzerland also continued to benefit from strong demand for vintage and pre-owned models.
Wos in the Future Months
Looking ahead, the group aims to further expand its Rolex CPO presence. The opening of the Rolex flagship in Old Bond Street, London, scheduled for March 2025, is a milestone in this strategy. This showroom will include a floor entirely dedicated to certified pre-owned watches, a clear signal of the growing importance of this market.
Compared to the big luxury groups, such as Richemont and Swatch Group, WoS's retail business has seen less bad data because it is restricted to the U.S. and U.K., and therefore is less exposed to the crisis in the Chinese market.
With full FY25 revenue forecasts between £1.67 billion and £1.73 billion, Watches of Switzerland confirms the central role of the luxury watch segment in its strategy. The success of the Rolex CPO program and the focus on iconic brands are set to further strengthen the group's leadership in the global luxury market. In addition to this, the recent acquisition of Hodinkee, also only adds to the interest in what media strategy the group will want to adopt.
