Watches of Switzerland Group PLC

Watches of Switzerland Group PLC (LSE: WOSG) is an FTSE 250 index-liste luxury watch retailer, operating in both the UK and US.

Q3 FY24 Business Update (Released on 08 February 2024)

• Technical Update: WOSG’s stock price is in the downtrend forming lower lows and lower highs and any fresh uptick might be potentially used to further liquidate the holdings by the investors. For the prices to resume an uptrend the near-term resistance of GBX 455.00, needs to be taken off with strong volumes, accompanied by improved financial performance. The contracting economy and rising cost of living, the spending on luxury watches is a reason to be cautious about the stock in the near term.
• Trading Update: The company reported the group revenue which declined by 1% at a constant currency basis at GBP 407 mn ad 3% down on reported sales in Q3 FY24 where as the 9M FY24 group revenue declined by 1% on a constant basis, 1% down on reported basis at GBP 1,172 mn as compared to pcp.
• Sluggish Profitability Margins: For H1 FY24, the Gross margin of the group was 13.3% against 14.8% in H1 FY23, and the EBITDA margin of WOSG slipped to 16.9% in the same period (H1 FY24) against 17.6% in pcp. Also, the company reported net margin of 6.2% in H1 FY24 as compared to 4% in H1 FY23.
• Inefficient Debt Management: During H1 FY24, the company reported a higher Debt/ Equity ratio of 1.02x, when measured against the industry median of 0.86x. Further, the % of long-term Debt to the Total Capital of WOSG was 45.6% in H1 FY24, as compared to the industry median of 26.4%.

Share Price Chart

Conclusion

Due to the current macroeconomic condition, higher interest rates, poor sentiments, and considering the outflows and technical chart pattern, a "WATCH" recommendation on Watches of Switzerland Group PLC (LSE: WOSG) has been given at the closing market price of GBX 389.20 (as of 13 March 2024).

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 13 March 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 4: Dividend Yield may vary as per the stock price movement.