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The UK-based seller of Rolex, Omega and Breitling watches has become the latest luxury brand to fall victim to waning profits following an unimpressive holiday season.
Watches of Switzerland on Thursday said that it had experienced a 'volatile trading performance in the run-up to and beyond Christmas', causing the group's shares to tumble more than 30 percent.
CEO Brian Duffy blamed the dip on customers 'allocating spending to other categories, such as fashion, beauty, hospitality and travel'.
That said, sellers like Richemont, a Swiss group that shill brands like Cartier and Jaeger-LeCoultre, remained unaffected - recording an 11 percent rise after it reported an 8 percent sale increase during the three months through December.
Nonetheless, Duffy assured analyst Thursday his $1.1billion firm - Britain's biggest retailer of Rolex, OMEGA, Cartier, TAG Heuer and Breitling - would soon devise strategies to adapt.
The main UK seller of Rolex has become the latest luxury brand to sound the alarm on waning profits - following an unimpressive holiday season. Pictured: Tom Hardy wearing a Rolex Explorer II ref. 216570 with a white dial
Meanwhile, a Swiss group that sell brands like Cartier and Jaeger-LeCoultre, Richemont, remained unaffected - recording an 11 percent share rise after an 8 percent sales rise after December. Pictured: Jennifer Aniston wearing a Cartier bracelet in 2009
'We're sorry we didn't see it coming more than we have done, we're adjusting to it, we've recalibrated now [and] we're on for our long-[term] plan,' Duffy, 69, said.
Admitting the year-end results were 'disappointing', he proceeded to claim the company had received a different mix of Rolex watches from the Swiss manufacturer than normal, reducing average sales prices.
He explained how Rolex - a privately owned entity that generates more than $10billion in revenue in sales - sent the company predominantly watches made of steel, rather than the more expensive combination of steel and gold.
'They produced more steel and less of the precious metal and that was a surprise to us and fairly late on in the period,' the head exec said.
Duffy claimed that he and others 'did not anticipate a drop in our average selling price,' nor 'that product mix change.'
A change in the overall number of watches received from Rolex - the seller's most desired brand - could also have caused the profit dip, Duffy said,
He theorized the shift could serve as proof of a more conservative approach from watchmakers amid decreased buyer confidence, as the sector has reported slowing demand in both the US and Europe, where rising prices have prompted people to reduce spending,
'The festive period was particularly volatile this year for the luxury sector,' explained Duffy, before specifically blaming U.K. shoppers and their eschewing of expensive trinkets during the holidays as opposed to their American counterparts.
He said Britain had been its 'most challenged' market during the Christmas trading season, affecting not only sales of luxury watches, but non-branded jewelry.
Sales in the United States, he said, had grown at a “double-digit” rate in the weeks
