Another sign of the harm caused by the “tourist tax” emerged today, with Watches of Switzerland’s sales at UK airports still less than half of pre-pandemic levels even as passenger traffic returns to normal.
CEO Brian Duffy told the Standard that sales at showrooms in Heathrow and Gatwick were still only “40% to 50% of what it was”, and added that the removal of VAT-free shopping had an especially big impact on its airport business. He added that some of the impact was also due to the group “pulling back” on the number of watches from Rolex, always among the most in-demand brands, it stocks at the airport showrooms because of supply changes.
But he added: “Demand is still strong when you consider that people are paying full price.”
For the three months to July 30, UK and Europe revenue was down 8%, but Duffy said this was largely because of fluctuations in supply.
Because many products have years-long waiting lists, the booking of sales often depend on when the watches are delivered.
Watches of Switzerland, which sells high-end brands such as TAGHeuer, IWC and Breitling, had received a wealth of in-demand timepieces in the previous quarter, which boosted sales for that period but then meant that fewer were delivered this quarter.
Duffy said supply always works itself out over the course of a year, but quarterly fluctuations like this aren’t uncommon.
“For reasons we’ll never fully understand, Q4 of last year supply was particularly good,” he said. “So sales were very good but we new that Q1 of this year would offset that.”
Group revenue slipped by 1% to £382 million, with strong trading in the US cancelling out most of the European decline.
Duffy added: “Looking ahead, we expect to return to more normalised growth rates in the balance of the financial year.
“Our full year guidance for another year of strong growth remains unchanged, underpinned by our supply visibility, client Registration of Interest lists and strong pipeline of showroom openings, refurbishment and investment, as luxury watch demand continues to outstrip supply. We look forward to presenting our Long Range Plan update in the Autumn, which will outline our growth ambitions to FY28.”
The business also launched a “certified pre-owned” channel for selling used Rolex watches during the quarter, and expects to roll this out in the UK in September.
