The boss of luxury retailer Watches of Switzerland said he is braced for UK consumer confidence to remain under pressure throughout 2024 as higher interest rates take their toll.
Chief executive Brian Duffy said while there were some “encouraging” signs, consumers are continuing to rein in their spending on luxury and jewellery after being battered by a barrage of interest rate hikes, high inflation and falling house prices.
He told the PA news agency: “The past 12 months, UK consumer sentiment has not been positive and confidence has been low.
“We’re not expecting consumer sentiment to really change in 2024 – we don’t think it will get any worse, but it won’t get any better.”
The group saw revenue in the UK and Europe fall 4% in the six months to October 29, though overall sales were buoyed by a more resilient performance in its burgeoning US business, where sales lifted 11% on a constant currency basis.
Despite the US sales boost, which helped overall sales edge 2% higher on a constant currency basis to £761 million, higher costs saw the group’s statutory pre-tax profits slump 20% to £67 million.
Mr Duffy said: “The whole sentiment in the US is much more positive than in the UK and it is an under-developed market for luxury watches.”
The group is focusing growth efforts on the US, which currently accounts for 43% of group-wide sales and is set to be the firm’s biggest market in 2025.
Mr Duffy said the firm is expecting a “decent Christmas season overall” despite consumer confidence woes on these shores, although he said festive sales would come “later this year”, with Christmas Eve falling on a Sunday.
The firm said it is rolling out its new pre-owned watch ranges in the UK and US, which is helping boost availability of products for sale in what is a restricted market for supply.
Mr Duffy said: “Our client registration lists continue to grow, whilst the pre-owned market remains a significant opportunity.
“We are encouraged by the early performance of the Rolex Certified Pre-Owned programme following its launch in the first half in both the US and UK.
“We will continue to expand the number of showrooms to meet demand for all pre-owned luxury watches and are excited by the growth potential in this category.”