FTSE 250 movers: Watches of Switzerland not ticking; Darktrace deal pleases

(Sharecast News) - FTSE 250: 20,351.90, +0.24% at 1440 GMT. Watches of Switzerland reiterated its full-year guidance on Thursday as it posted a jump in third-quarter revenues amid solid demand, but shares in the retailer tumbled as results missed expectations.

The company said Q3 revenues rose 17% on the same period a year earlier to £407m, while revenues for the nine months to 29 January were 25% higher at £1.17bn.

Its performance in the third quarter was underpinned by luxury watches, sales of which rose 22% to £340m, representing 84% of revenues. This was driven by an increase in average selling price and volume and Watches said demand in the category continues to exceed supply.

Meanwhile, Q3 sales of luxury jewellery dipped 2% in the same period a year ago to £41m, as the company continues to focus on full-price sales, with average selling price increasing in the quarter.

UK and Europe sales were up 7% in the third quarter to £238m, while US sales rose 36% to £169m.

Jefferies, which rates the stock at 'buy', said the third-quarter numbers were a "modest miss versus consensus which was driven by the US". Consensus expectations had been for group reported sales of £425m and UK and Europe sales of £245m.

US sales fell short of Jefferies' estimate of £180m.

Chief executive Brian Duffy said: "Demand remains strong and continues to exceed supply, with client registration lists growing. We exited the quarter with good momentum and are pleased to reiterate our full year guidance.

"Our expansion into Europe continued with the opening of our fifth mono-brand boutique, with Omega in Stockholm in the third quarter. Early trading remains positive, and we are excited to open our first mono-brand boutique in Dublin with TAG Heuer later this month.

"Looking ahead, we remain confident that our strategy will further enhance our leadership position as we continue to deliver on our Long Range Plan objectives."

For the full year, it continues to expect revenue of between £1.50bn and £1.55bn, adjusted EBITDA flat to 0.5% higher, and adjusted EBIT of £163m to £175m.

UK house builder Redrow held its dividend as it reported a fall in interim profits and scrapped 2024 guidance, but noted that early indications for the rest of the year were better than expected.

The company reported pre-tax profits of £198m, down 5% as revenue fell 21% to £1.03bn. "Economic and political uncertainty" led to a fall in sales rate to 0.38 private reservations per week from 0.64.

UK home buyers were have been hit by rising mortgage rates as the Bank of England tries to stymie soaring inflation. Potential buyers were also hit by the disastrous "mini-budget" of former prime minister Liz Truss , which saw thousands of loan products pulled from the market.

"We have experienced a positive start to second half trading. Whilst 2023 will be a challenging year as the market resets, early indications are better than anticipated and the market appears to be finding a new, natural level," the company said.

"Our net private reservation rate per outlet per week over the first five weeks of calendar year 2023 was 0.51 compared to 0.38 for the first half of the financial year. We also entered the second half with a total order book of £1.1bn, of which £0.8bn was private."

Redrow said it expected to achieve annual revenue of around £2.05bn, with an operating margin in the region of 18% - 18.5%. It added that due to recent changes in market conditions it had withdrawn its guidance for 2024.

Victoria Scholar, analyst at Interactive Investor, said Redrow and industry peers had enjoyed an "impressive start to 2023 as investors increasingly look ahead to the prospect that the rate hiking cycle could be approaching its peak and hopes that mortgage lending and property demand could pick up later in the year".

"However Redrow shares are under pressure today weighed down by the uncertain outlook after guidance was removed and its declines on the top and bottom lines."

Cybersecurity firm Darktrace has closed its largest deal to date with a critical infrastructure organisation as part of an effort to get ahead of state-sponsored attacks and support digital transformation.

Darktrace said its PREVENT/OT artificial intelligence product promises to "think like an attacker" and visualise pathways within information technology and operational technology that can lead to critical infrastructure assets.

The FTSE 250-listed group has signed several new deals with critical infrastructure organisations across the globe in the last three months including new customers, renewals and expanded contracts within the critical infrastructure industry.

Financial terms of the deal were not disclosed.

"We are thrilled to have closed our largest deal to date with a major critical infrastructure organization," commented chief executive Poppy Gustafsson.

"Critical infrastructure is a top target for the world's most sophisticated and well-resourced cyber-attackers. Now with our PREVENT/OT product, defenders can prioritize and test the routes adversaries might take to get to the 'crown jewels'. Crucially, we can then harden defenses against that attack in advance of the worst happening. That is truly game changing in the ongoing battle for control of the world's critical infrastructure and I am delighted that Darktrace has continued to evolve its product family to address this global challenge."

FTSE 250 - Risers

Just Group (JUST) 87.00p 5.07% NB Private Equity Partners Ltd. (NBPE) 1,600.00p 4.58% ITV (ITV) 93.24p 3.72% PureTech Health (PRTC) 255.50p 3.65% Bakkavor Group (BAKK) 121.20p 3.59% Baltic Classifieds Group (BCG) 151.80p 3.55% Ferrexpo (FXPO) 140.00p 3.47% Darktrace (DARK) 250.50p 3.26% Abrdn Private Equity Opportunities Trust (APEO) 483.00p 2.77% PZ Cussons (PZC) 200.00p 2.67%

FTSE 250 - Fallers

Watches of Switzerland Group (WOSG) 896.50p -10.88% Virgin Money UK (VMUK) 185.85p -3.70% Diversified Energy Company (DEC) 106.70p -3.70% Aberforth Smaller Companies Trust (ASL) 1,376.00p -2.82% CLS Holdings (CLI) 157.60p -2.60% UK Commercial Property Reit Limited (UKCM) 55.00p -2.48% Target Healthcare Reit Ltd (THRL) 80.90p -2.41% Redrow (RDW) 533.50p -2.11% Currys (CURY) 73.40p -2.07% Pennon Group (PNN) 916.50p -2.03%