(Bloomberg) -- Watches of Switzerland Group Plc, the top Rolex seller in the UK, plunged the most in more than two years as sales of luxury timepieces and jewelery in the US missed analyst forecasts.

The stock dropped as much as 16.5% in London after the company reported weaker-than-expected sales for its fiscal third quarter on Thursday, particularly in the US. The shares pared losses and were down 8.5% as of 11:15 a.m. London time. 

The results could be an early warning sign of a potential slowdown in the red-hot luxury watch market that has been driven by US consumers rediscovering luxury mechanical timepieces during the pandemic.

Investors are looking for signs of weakness in the booming sector as US consumers cut down on spending amid higher inflation, slowing economic growth and the collapse of cryptocurrencies. Consumers in the UK are also feeling the pinch from soaring cost of living expenses and a weak economy. 

Swiss watch exports surged to record values above $24 billion in 2022, driven by strong demand from the US. Export growth slowed in December, however, to above 5% from double-digit growth.   

Watches of Switzerland reported a 17% increase in sales during the period to £407 million ($494 million), missing analyst consensus. US sales of £169 million fell short of estimates of £180 million from Jefferies as growth from acquisitions slowed, analysts at the investment bank said in a report.  

Watches of Switzerland Chief Executive Officer Brian Duffy said there had been few signs of a slowdown in demand as waiting lists for watches from Rolex and other top brands continued to grow. 

Duffy said some customers who had been on waiting lists for multiple watches had begun deferring purchases when they got the call that one was available. 

“That’s the only thing that we’ve seen,” he said.  

Duffy said many of the top brands including, Rolex, Omega, Patek Philippe and Zenith had raised prices since the beginning of the year by an average of about 4%. 

Watches of Switzerland is the top retailer of Rolex watches in the UK and one of the biggest vendors in the US.

While demand for new Rolex watches has been strong, prices for second-hand models, which typically trade at a premium to retail prices have been falling sharply after an unprecedented rise in 2021 and the first quarter of 2022.

An index of secondary market prices of Rolex models created by WatchCharts has dropped 19% in a year.

Rolex launched a certified pre-owned program with authorized dealers for its watches last year that will give the biggest Swiss watch brand a foothold in the used market. 

Duffy said Watches of Switzerland was in talks with Rolex to launch sales of certified pre-owned Rolex at its stores and expects to start selling so-called CPO Rolex watches before the end of the year. 

--With assistance from Sam Unsted.

(Updates with shares paring losses in the second paragraph)

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