Watches of Switzerland sees full-year sales soar, will list on LSE
A strong increase in revenues in the fourth quarter helped the UK’s largest watch retailer reach revenues of £773 million in the year ended April 2019, up by an impressive 22.5% on the previous year.
Watches of Switzerland is considering an initial public offering in London, stating that it is well placed to capitalise on “significant growth opportunities” in the UK and US.
Indeed, as its latest trading update reveals - published on Thursday together with its intention to float on the London Stock Exchange - the company has been performing exceptionally well over the past five years.
In the 2019 financial year, the group achieved revenue growth of 22.5% on a reported basis and 10.2% on an adjusted basis. This was boosted by a 14.4% increase in revenue from sales of luxury watches, including products from high-end brands such as Rolex, Patek Philippe, Tag Heuer, Omega and Breitling. The UK enjoyed an 8.6% increase in revenue (10% on a like-for-like basis) while the US experienced growth of 12.3% on a local currency basis (7.1% on a like-for-like).
“I am very pleased with our last quarter of FY 2019 and full year FY 2019 revenue performance which continues to demonstrate the success of our strategy and transformation program we embarked on five years ago,” commented the company’s chief executive, Brian Duffy. Under his leadership, the group’s revenues have grown at a CAGR of 18% since 2014.
UK AND US GROWTH
With 125 stores in the UK and 21 stores in the US, the group sells luxury watches and jewellery through its Watches of Switzerland, Goldsmiths, Mayors and Mappin & Webb stores, mono-brand stores and a comprehensive ecommerce platform.
It has a 35% share of the UK luxury watch market, and Rolex is the best performing brand in its offering. Last year, 50% of Rolex’s sales in the UK were facilitated by the group, which became the first authorised UK retailer of the luxury watch brand in 1919. Currently, it operates almost 40% of all Rolex agencies in the country.
Overall, the luxury watch market in the UK has grown strongly over time, and stood at an estimated £1.5 billion in 2018. This compares with the US market, described as “under-developed” due to a general lack of investment and less developed distribution networks. There, Watches of Switzerland operates 21 stores, including two recently opened boutiques in New York and Las Vegas. And since its acquisition of the Mayors chain in 2017, the group has been largest luxury watch retailer in the south-eastern US and is the largest Rolex retailer in Florida and Georgia.
“I am incredibly proud of the transformation Watches of Switzerland Group has undergone over the last five years to become the UK's leading luxury watch retailer and successfully enter the important US market. Today's announcement signals the next stage in that journey, leveraging our scale, retail and e-commerce expertise, and strong stakeholder relationships to continue our profitable growth strategy.”
So the company is considering applying for flotation on the London Stock Exchange to sell 25% of new and existing shares. Barclays Bank Plc and Goldman Sachs International have been hired to work on the IPO, which could value the group at up to £1 billion according to Reuters.
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