Watches of Switzerland Group delivered a Q3 trading update on Thursday with the high-end watches and jewellery specialist saying the 13 weeks to 26 January were “in line with expectations” and it’s “on track to deliver FY25 guidance”.
Trading over the festive period in both the UK and US was “good” and demand for its key luxury brands, particularly products on Registration of Interest lists, “remains strong, outstripping supply in both the UK and US markets”.
It added that it continues to be “encouraged by the performance of our pre-owned businesses and the strong performance of the Roberto Coin brand in North America”.
Over the period, it also saw “further stabilisation of the UK market in both luxury watches and jewellery, while the US market has seen continued momentum”.
And it believes its “differentiated business model, alongside the continued investment in our showroom portfolio, has driven market share gains in both the UK and US”.
The integration of the recent acquisitions of Hodinkee and Roberto Coin Inc is “progressing well, and we are advancing a number of incremental growth plans with these businesses”.
It has also continued its showroom development programme, with the opening of the relocated and expanded Mayors Tampa, Florida and Betteridge Vail, Colorado showrooms in December.
Key projects for this year include the introduction of new Rolex agencies to its relocated showrooms of Watches of Switzerland Plano, Texas and Mayors Jacksonville, Florida, alongside the conversion of the Mayors Lenox, Atlanta showroom to a 3,000 sq ft Rolex boutique.
At the beginning of March it will open the new flagship Rolex boutique on Old Bond Street, London “which will be a major destination for Rolex in the UK market”.
The Bank of England cut interest rates by a quarter of a percentage point on Thursday, judging a sharp upward revision to its inflation forecasts for this year will prove temporary.
The cut to 4.5% was in line with economists’ expectations in a Reuters poll, but two officials called for a bigger rate cut against a backdrop of weaker growth.
Sterling fell to $1.2370, from $1.2425 just before the decision and was down over 1% on the day. The pound also weakened against the euro to last trade around 83.74 pence compared 83.40 pence earlier.
UK government bond yields fell, with two-year yields last down 6 basis points at 4.08% versus 4.13% just before the rate decision.
London’s blue-chip FTSE and the mid-cap FTSE 250 stock index accelerated their gains and were last up over 1.5% each.
Comments: Zara Nokes, Global Market Analyst, JP Morgan Asset Management, London: “With December’s softer-than-expected inflation print having fuelled market expectations for a cut, the Bank of England likely felt it had no other choice today. The distribution of votes showed high conviction in the call, yet this approach is not without risks.
“While economic activity is clearly slowing, inflation pressures are not. Inflation expectations have picked up as a result of higher energy prices, strong wage growth and businesses signalling that they intend to charge higher prices in response to October’s tax hike.
“The growth outlook might also not be as bad as business surveys suggest, with the large increase to public services spending announced in the Autumn Budget likely to provide a tailwind to growth this year, offsetting some of the private sector weakness. Against this backdrop, the Bank must be resolute in its commitment to bring inflation back to target.
“Rate cuts might be popular in the short term but, ultimately, there will be a higher price to pay further down the line if inflation is not stamped out now.”
Zsolt Kohalmi, Deputy CEO & Global Head of Real Estate, Pictet Alternative Advisors, London: “Interest rates are crucial to the real estate recovery story. UK rates are currently between the U.S., which are higher, and continental Europe, which are lower. “For a recovery in the UK real estate market to really take place, though, UK rates need to come down significantly and be closer to the European rate curve outlook, rather than the U.S. For now, this is far from certain, but would be a bonus for investors in UK real estate.”
Michael Field, Chief European Strategist, Morning Star, Amsterdam: “With plentiful equity market opportunities for investors in the UK, we believe further interest rate cuts over the course of 2025 will lighten the load for consumers and businesses alike. This should create a more supportive economic backdrop for commerce generally.”
Ambitious Beauty Tech Group is working with investment bank Berenberg on plans to float the business on the main London market later this year.
The owner of CurrentBody, ZIIP Beauty and Tria Laser brands is plotting a £350 million IPO, reported Sky News. However details, including the size of any primary share sale, have yet to be finalised, insiders said, with the £350 million figure an estimate.
Manchester-based The Beauty Tech Group, which is run by co-founder and chief executive Laurence Newman, is owned by its management team including fellow co-founder and chief technology officer Andrew Showman and finance chief Sam Glynn together with “a group of high net worth individuals”, the reports said.
The group saw a major increase in revenue last year, with sales passing the £100 million for the first time, up from £80m in 2023. Its revenues comprise just under a quarter from the UK and 77% internationally. Since the beginning of this year, it has been exclusively focused on own-brand sales.
The report says the beauty technology market is projected to grow from £2.7 billion in global sales in 2023 at a compound annual growth rate of up to 17% until 2026, according to PricewaterhouseCoopers.
In a statement to Sky News, Newman said: “2024 was another significant year financially and strategically for the group. We delivered revenue of over £100 million and successfully acquired Tria Laser while also completing the integration of ZIIP Beauty.
He added: “These acquisitions have diversified and increased the group’s product offering across the rapidly growing beauty tech market and, in line with our strategic ambitions, the group is now focused exclusively on own-brand products. I am confident that 2025 will be another record year.”
The business, which describes itself as a global industry leader in home-use beauty technology, is focused on products which use LED, radio frequency, microcurrent and laser treatments. It counts Harrods among its retail partners, while its products are also sold on more than 20 direct-to-consumer websites around the world.
The Trump administration move to stop low-cost imports entering the U.S. tariff-free is likely to hit fast fashion retailer Shein harder than online dollar-store Temu, thanks to Temu’s wider product range and moves to change its shipping strategy.
Both sites grew exponentially in the U.S. in recent years helped by the so-called de minimis rule, a measure that exempted shipments worth less than $800 from import duties. A June 2023 report estimated the Chinese retailers accounted for more than 30% of all packages shipped to U.S. each day under the rule.
The rule began to come under scrutiny during the Biden administration prompting both firms to start making preparations to rely less on it, but Temu made changes to its model faster, analysts and sellers told Reuters. Temu is owned by PDD Holdings while Shein is aiming to list in London in the first half of the year.
Tech analyst Rui Ma said Temu “rapidly expanded its semi-managed model” as part of its groundwork, an Amazon-like strategy that sees goods shipped in bulk to overseas warehouses instead of directly to customers.
Within months of first bidding to attract sellers keeping inventory in U.S. warehouses last March, about 20% of Temu’s U.S. sales were shipped from local sellers rather than directly from China, according to estimates from e-commerce market research firm Marketplace Pulse.
Two China-based Temu sellers told Reuters that by the end of last year, half the products they sold to the U.S. were sent to warehouses there first.
Temu has also been increasing the proportion of goods it sends by sea. Basile Ricard, operations director at Ceva Logistics Greater China, said an increase in Temu ocean-freighting more goods in bulk – and larger-sized, more valuable goods, such as furniture – was apparent in the “second half” of last year, reducing importing under the de minimis threshold.
In contrast, Shein remains more reliant on air freight to directly ship the thousands of styles of ultra-fast fashion items it pumps out each week, Ricard said, although it has opened centres in states including Illinois and California, as well as a supply chain hub in Seattle.
“I think it’s important to separate Shein from the rest of the e-commerce players because their business is based on speed of supplying new styles and they have to remain very reactive to trends, so speed is a bigger part of their business,” he said. The vast majority of Shein’s products are still made in China, but it has also started to diversify its supply chain, adding suppliers in Brazil and Turkey, for example, a move that might also accelerate in the wake of new tariffs and regulations.
Temu and Shein did not respond to requests for comment.
Trump’s executive order this week plunged the express shipping industry into confusion with the U.S. Postal Service on Wednesday reversing a decision not to accept parcels from China and Hong Kong it had announced just 12 hours before.
Nomura analysts estimate that the volume of de minimis shipments to the U.S. could plummet by 60%, as American shoppers ordering from Shein, Temu and Amazon Haul face higher prices.
About 1.36 billion shipments entered the United States using the de minimis provision in 2024, 36% more than in 2023, according to CBP data.
Ma, however, said that she expected Shein and Temu to be able to adapt quickly, given the agility of China’s e-commerce firms and their supply chains.
“I think there will be real impact, especially in the short term, but it is not catastrophic,” Ma said. “China has the most competitive e-commerce operators and the most advanced supply chain. Short of a total ban or something crazy like that, I think they will be able to figure it out.”
Entertainment8 years ago