NEWSLETTER
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Switzerland watches (LSE: Wosg) Actions have dropped by 27% more than a month, but only 8% during the past year. As such, £ 10,000 invested 12 months ago would now be worth £ 9,200. It is clearly not a good return, but taking into account the recent volatility, it would not be too discouraged. Sometimes everything is relative.
Tariffs, tariffs, tariffs
I feel like a broken record, but Trump's tariffs are a big problem for companies around the world. Switzerland watches, with operations that cover the United Kingdom, USA and parts of Europe, is no exception. The company is based on importing luxury watches from Switzerland and other European countries, which makes it vulnerable to changes in commercial agreements or tariff regimes.
So, let's take a close look at the problem of the rate. The United States has imposed a 31% rate to Swiss imports, aimed at one of the company's most critical supply chains. The United States is not just an important market for Swiss watches: it is the largest export destination for Swiss watches, which represents 16.8% of Swiss watches exports in 2024 (around Chf4.4bn).
For a retaorist like Watches of Switzerland, who specializes in high -end Swiss brands such as Rolex, Patek Philippeand OmegaThis rate represents a direct success to its central operations.
According to the research I have found, tariffs will apply to the import value of the goods. According to several calculations, this means the cost of a Rolex land inhabitant from $ 16,100 to approximately $ 17,900. It is not a massive increase, but it will certainly be remarkable.
While people with high assets of the network can still buy luxury watches despite price increases, medium -level buyers are more likely to resist 15% -30% more. This could lead to a slowdown in sales for entry level luxury brands such as Longines either Tissue.
Cross -border arbitration
On the basis of the above, I suggest that the upper end of the Swiss rank watches is quite inelastic. In other words, if you want to spend £ 12,000 on a rolex, it will probably do it independently of the rates. I have been wondering if the rates will promote cross -border arbitration – Traveling abroad to take advantage of the lowest prices, with American buyers buying abroad. Only time will say it.
The paper improvement assessment
The front assessment of Switzerland watches reflects a mixed perspective. The company's price ratio (p/e) of the company is estimated at 9.2 times, significantly lower than historical averages, indicating market skepticism about its growth potential. This figure is expected to fall 7.2 times by 2027.
However, the problem is that these figures are based on profits made before Trump's rates. Now it is almost certain that we will see analysts to review their projections down. I would also add to this that the company has a modest position of net debt of £ 120 million. Obviously, this must be taken into account when considering the P/E.
Personally, I will keep my dust dry in this case. The stock could be attractive, but there is so much uncertainty. It will certainly pay to monitor the rates news. Perhaps if the Swiss can negotiate a “better treatment”, the consequences can be more controllable.
(Tagstotranslate) category. Investing
