Barclays says Rolex value hikes increase Watches of Switzerland regardless of resale dip

Investing.com — The Watches of Switzerland Group (LON:WOSG) is poised to profit from current changes in retail costs by Rolex, its major provider, as per analysts at Barclays (LON:BARC). 

Rolex carried out value will increase throughout its metal and gold watch fashions, marking a median rise of about 5% in each the UK and US markets. 

Metal fashions noticed modest value hikes of about 1%, whereas gold fashions noticed a extra outstanding enhance ranging between 7% and eight%. 

These changes come as no shock within the UK, the place such modifications have been customary initially of the yr. Nonetheless, this marks a notable shift within the US market, the place no value will increase had been noticed on the identical time final yr.

Rolex watches account for round half of Watches of Switzerland’s income, with the UK and US markets collectively contributing an analogous proportion to the corporate’s general revenue. 

The value will increase are anticipated to bolster the corporate’s monetary efficiency in the course of the remaining months of its fiscal yr ending April 2025. 

Barclays analysts view the event positively, notably as Watches of Switzerland’s monetary steerage for the yr doesn’t think about value will increase past these already introduced. The revisions may even profit inventory bought previous to the top of 2024.

Whereas the first market outlook is optimistic, analysts spotlight a contrasting pattern within the secondary marketplace for Rolex watches. 

Over the previous 24 months, resale values have declined by about 12%, with a 5% drop famous within the final yr alone. Regardless of this, the retail phase stays sturdy, and analysts consider the value hikes are unlikely to discourage demand considerably.

Barclays maintains an “chubby” ranking on Watches of Switzerland, with a value goal of 590 pence per share, reflecting a 5.5% upside from the inventory’s year-end 2024 closing value of 560 pence.