(Reuters) -Watches of Switzerland slashed its annual revenue and profit margin forecast on Thursday, as consumers spend less on luxury items amid a cost-of-living squeeze, sending the luxury retailer's shares down to an over three-year low.
Shares in the company, which sells brands including Rolex, Cartier and Patek Philippe, plunged as much as 30%, its steepest one-day drop ever.
The London-listed company now expects full-year 2024 revenue of between 1.53 billion pounds ($1.94 billion) and 1.55 billion pounds, down from its earlier forecast range of 1.65 billion pounds to 1.70 billion pounds.
Several factors ranging from geopolitical tensions, a slower-than-expected recovery in China after COVID-19 shutdowns, and raging inflation have restricted consumer spending. Luxury brands are particularly hit with a slowdown in demand as high costs make people judicious with discretionary spending.
"The festive period was particularly volatile this year for the luxury sector, with consumers allocating spend to other categories," CEO Brian Duffy said in a statement.
French luxury group LVMH (EPA:LVMH), which owns Louis Vuitton and Dior brands, privately owned Chanel, and Britain's Burberry, have all been hit by a slowdown in demand for luxury goods.
On a constant-currency basis, Watches of Switzerland said it now expects revenue growth of 2% to 3%, compared with previously guided range of 8% to 11%.
The company also expects profit margins of 8.7% to 8.9% for the year, compared with 2023 levels of 10.7%.
Cartier jewellery owner Richemont (LON:0QMU) painted a mixed picture of the luxury sector in its latest results on Thursday, reporting a sales decline in Europe in what it described as an uncertain economic and geopolitical environment.
($1 = 0.7877 pounds)