08 February 2024 , 11:09
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Watches of Switzerland, a seller of luxury Rolex watches, has reported a drop in sales in the UK.
The company blames this on a 'tourist tax' and consumers spending less. The firm, which is the UK's largest retailer for Rolex and Omega watches, said it made little profit from overseas shoppers due to the tourist tax.
Sales in the UK and Europe fell by 7% in the three months to the end of January, compared to the same period last year, totalling £222 million. The company believes that tougher economic conditions have led households to cut back on luxury items.
This has resulted in a decrease in demand for luxury watches and non-branded jewellery, which saw high levels of discounting and promotions. Instead, customers are choosing to spend their money on other items such as clothes, makeup, dining out and travel, according to Watches of Switzerland.
The company also revealed to investors that its financial performance was largely driven by UK shoppers, with minimal returns from tourist spending. This is due to the Government scrapping VAT-free shopping for tourists a few years ago, a move which particularly affected luxury retailers who rely on wealthy tourists.
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Other retailers like Burberry and Mulberry have blamed the end of tax-free shopping for weaker sales in the UK, with people choosing to splash out on luxury items in other European cities instead. But Watches of Switzerland said it was "encouraged" by the Government's independent forecaster announcing a review into this controversial decision, which will look at the pros and cons.
The results of the review could be revealed alongside the Chancellor's spring Budget next month. Meanwhile, Watches of Switzerland reported stronger sales in the US where shoppers were still keen to buy, with sales going up 8% over the latest quarter.