Rolex retailer Watches of Switzerland has said its UK sales continue to be impacted by “minimal return” from tourist spending due to a lack of VAT-free shopping.
However, the group, which also owns the Goldsmiths and Mayors jewellery chains, said it was “cautiously optimistic” about trading over the next year as it posted a growth of 4% in group revenue to £380 million over the 13 weeks to the end of April.
Revenue in the US grew 14%, the group said, but revenue in the UK and Europe fell 4% amid “challenging macroeconomic conditions”.
The group added that UK performance “continues to be driven by domestic clientele” with “minimal return of tourist spending due to the lack of VAT free shopping”.
The Government scrapped VAT-free shopping for tourists a few years ago, a move which particularly affected luxury retailers who rely on affluent tourists.
Known as the tourist tax, the move has been criticised by luxury retailers in the past, as they rely on affluent tourists.
Other luxury retailers – including Burberry and Mulberry – have blamed the reversal of tax-free spending on weaker sales in the UK, with shoppers instead choosing to spend more on luxury items in other European cities.
Despite the fall in European revenue, CEO Brian Duffy said the firm “finished the year strongly”.
“Particularly pleasing was the performance in the US, with sales up 14% in the period,” he said.
“We are confident that our strategy, exceptional client service and strong brand relationships enables us to continue to drive growth and gain market share.”