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Luxury Watch Sector: Analyses on Market Stability in the UK

Following the recent developments in the UK luxury watch market, Kettle Club has observed a promising stabilisation, particularly within the premium sectors. This perspective aligns with insights shared in our previous blog post, “Navigating the Rolex Price Adjustments: Insights and Opportunities in the Luxury Watch Market”, where our CEO, Sam, highlighted, “Prices are as low as they’re going to be, with potential increases in the next 12 months as the market stabilises.”

Market Trends and Sales Performance

Watches of Switzerland, a leading retailer in the UK and a top seller of Rolex watches, has reported significant growth in its used watch sales, which doubled in the fourth quarter from the previous year, now ranking as their second-biggest source of revenue. This surge indicates a robust interest in certified pre-owned models, reflecting a maturing market where seasoned collectors and new enthusiasts alike are seeking value and authenticity.

Despite a downturn influenced by post-Covid economic impacts, high interest rates, and global conflicts affecting consumer confidence, Watches of Switzerland has seen pressures on demand for high-end timepieces begin to ease. The company’s sales in the UK and Europe fell 5 percent in fiscal 2024 but are now showing signs of recovery as market conditions improve.

Investor Confidence and Company Outlook

The stabilisation has been positively received by investors, evidenced by a significant 9.7 percent increase in the company’s share price following their latest earnings report. Adjusted earnings before interest, taxes, depreciation, and amortisation fell 11 percent to £179 million for the year ended in April, surpassing analyst expectations. This performance is particularly notable as it comes at a time when the luxury watch market faces potential threats from industry shifts, such as Rolex’s acquisition of rival watch retailer Bucherer AG.

Strategic Production and Market Forecast

Watches of Switzerland has commented on the cautious approach Swiss watchmakers are taking with production rates. This strategy is aimed at preventing market over-saturation, thereby supporting the long-term stability of the luxury watch industry. This measured production is seen as a responsible move that aligns with broader market dynamics, ensuring that supply matches the evolving demand without compromising value.

Future Projections and Market Strategy

Despite earlier warnings that sales and profit might falter due to fewer allocations of gold and other precious metal watches from Rolex, and a cautious UK consumer base, Watches of Switzerland has reiterated its ambitious target to more than double its sales and earnings before interest and taxes by 2028. This optimistic outlook suggests a robust confidence in the recovery and growth of the luxury watch market in the UK.

Kettle Club’s Viewpoint

At Kettle Club, we continue to monitor these trends closely, offering our clients not just exceptional timepieces but also expert insights into market conditions. We believe that understanding these dynamics enables our clients to make informed decisions, whether they are adding to their collections or choosing their first luxury watch.

Stay tuned to Kettle Club for more updates and detailed insights into the evolving landscape of luxury watches. Our commitment to guiding you through the complexities of the watch market ensures that you are always well-prepared to make the most of your investments in this fascinating field.