Watches of Switzerland saw sales dip during its third quarter, with the UK taking a hit due to the tourist tax.
Group sales for the period fell 3% to £397m for the 13 weeks to 28 January while UK and Europe sales plunged 7%.
The upmarket jeweller said the removal of VAT-free shopping had meant it had seen “minimal return” of tourist spending.
Chancellor Jeremy Hunt this week asked the Office for Budget Responsibility (OBR) review the decision and look into whether it should be reversed, which Watches of Switzerland said it was “encouraged” by.
It comes as a report by the Centre for Economics and Business Research (CEBR) found that the tourist tax is costing the UK £11.1bn and deterring around 2m foreign visitors per year.
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The watch retailer flagged that the challenging macroeconomic conditions in the UK had impacted spending across the luxury sector and flagged that non-branded jewellery saw “unusually high levels of promotional activity”.
Watches of Switzerland reconfirmed its guidance from January, when it lowered its profit and sales guidance for the year.
Last month, after a “volatile trading performance” in the run-up to Christmas and beyond, it cut warned that adjusted EBIT margin would fall from the 10.7% achieved last year to 8.7% to 8.9% in its current financial year.
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