Watches of Switzerland continues impressive run in H1 and Q2
Strong and broad-based trading momentum through Q2 and ongoing market share gains in the UK and US? It must be a Watches of Switzerland (WoS) trading update.
There were certainly no surprises in the UK-based luxury watch and jeweller retailer’s performance across the 13 weeks (Q2 FY23) and 26 weeks (H1 FY23) to 30 October.
The retailer seems unable to do any wrong at present, and its unerring consistency continues with the wider H1 delivering a 23% leap in group revenues to £765 million at constant currencies.
Core luxury watch sales for the half year rose an impressive 31% at reported rates to £667 million, representing 87% of revenue “with growth driven by increases in average selling price and volume”. Even with the group’s heavy reliance on physical stores, e-commerce sales still lifted 7% on last year at reported rates.
Luxury jewellery jumped an even better 38% at reported rates to £56 million “as we continue to elevate our product offer and distribution”, it explained.
And that continued strong momentum saw UK revenue rise 8% year-on-year to £454 million with the performance driven by domestic clientele, it noted. The US performance was even more impressive, with revenue of £311 million representing a 60% jump at constant currency and +86% at reported rates, with revenue growth excluding acquisitions up 44% at constant currency.
WoS said H1 FY23 adjusted EBIT is expected to range between £86 million and £88 million from £67 million a year ago, as margins benefited from £5 million of UK business rates relief.
For Q2, the positive results kept rolling in. Group revenues for the period rose 21% at constant currency and +30% reported to £374 million.
UK revenue for the period lifted 9% to £215 million, and although tourist sales “remain very low”, WoS said there’s been “consistent performance improvement at airports throughout the quarter”. US revenue jumped 46% at constant currency and 74% reported to £159 million. Revenue growth excluding acquisitions was 30% at constant currency.
Ongoing investment in showrooms in Q2 saw nine new stores opened in the UK, five in the US and three in Europe.
CEO Brian Duffy said: “Demand remained strong through the quarter and continues to exceed supply, with client registration lists extending as consumers respond to innovative new products, impactful marketing and elevated client service.
“The first half of the year has been a busy period of new showroom openings — including five showrooms at the Battersea Power Station in London and additional monobrand boutiques across the UK, US and now Europe — together with showroom refurbishments as we continue to invest to elevate the luxury experience for our clients.”
He added: "Our strong H1 performance underpins our full-year guidance, which we have upgraded to reflect the benefit of foreign exchange movements. Looking ahead, we remain confident in our ‘Long Range Plan’ objectives, supported by a strong pipeline of expansionary projects as we continue with our strategy of investing for growth.”
But WoS “continues to anticipate the potential for more challenging market conditions in the second half”.
However, it also said: “We believe that the strength of the luxury watch and jewellery categories, the unique supply/demand dynamics of luxury watches and client registration lists, our portfolio of leading brand partnerships, and the success and agility of our model will continue to support long term sustainable sales growth.”
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