Watches of Switzerland results show ongoing strength in UK and US
Watches of Switzerland Group continued on its upward trajectory in the first half and also said with its H1 results on Wednesday that Q3 trading to date is in line with expectations. It also reiterated its FY23 guidance.
The company didn’t give any detailed figures about Q3 and in a trading update last month, it had said that it “continues to anticipate the potential for more challenging market conditions in the second half”. But it looks like we’ll have to wait for post-Christmas updates to see exactly what’s been happening in the ‘golden quarter’.
So what about that performance in the first half? The company said group revenue rose 31% (or 23% on a constant currency/CCY basis) to reach £765 million. That's divided into an 8% rise to £454 million in the UK and Europe and an 86% rise (or 60% CCY) to £311 million in the US.
It's interesting that while luxury watches remains its core category, luxury jewellery is growing much faster. The former’s reported sales rose 31% to £667 million, while the latter was up 38% at £56 million.
Adjusted EBITDA rose 26% to £104 million and adjusted EBIT rose 29% to £87 million. Statutory profit before tax was up 28% at £83 million.
That came as it saw “continued strong demand for luxury watches and jewellery”, with growth driven by increases in average selling price as well as volume. It also made “excellent progress” with its showroom expansion and refurbishment programme and saw group e-commerce sales rising 7% on last year at reported rates.
The company talked of “continued strong momentum in the US” as it opened new showrooms and ended the half with 24 multibrand showrooms (up from 19 a year ago) and 23 monobrand boutiques (up from just 14 this time last year).
CEO Brian Duffy added that the firm’s growing pipeline of showrooms and boutiques includes its third Watches of Switzerland multibrand showroom in Manhattan at One Vanderbilt, anchored by Omega and Cartier, and due to open in 2023.
Its UK performance was driven by strength among domestic shoppers, which is good news given the challenges in attracting tourists to the country since the abolition of tax-free shopping for such visitors nearly two years ago.
The company has also made significant investments in 10 new UK showroom openings including four monobrand boutiques and a Watches of Switzerland multibrand space at Battersea Power Station, London. And it continued the rollout of the Goldsmiths Luxury concept with four refurbishments in H1 and significant enhancements to its Watches of Switzerland flagship Regent Street multibrand space. Some showrooms were closed too and it all meant the half end with 91 multibrand showrooms (down from 98) and 46 monobrand boutiques (up from 32).
Importantly too, it opened four monobrand boutiques in Europe with early trading in line with expectations and two further boutiques opening in the current half.
The company said it believes “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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