Watches of Switzerland still riding high but says H2 could be challenging
The good news just keeps flowing from Watches of Switzerland Group with the company on August 16 issuing a buoyant trading update for the 13 weeks to the end of July.
The first quarter of fiscal 2023 saw it enjoying a “strong start to the year with waitlists continuing to extend” and a performance driven by [the] strength of our business model and market sector conditions”.
CEO Brian Duffy said: “The first quarter continued with strong momentum throughout, and we carry this positive momentum into the second quarter. Despite the well-publicised concerns about the macro-environment, demand for our products remains robust with client registration of interest lists continuing to extend.
“The luxury watch market is dynamic with exciting developments on new products and marketing across a broad range of brands.”
Q1 revenue was £391 million against £297 million a year ago, up 25% at constant currency, and up 31% at reported rates.
The performance came against a particularly strong comparative in the UK.
Luxury watch sales rose 32% to £342 million and luxury jewellery rose 36% to £27 million. It saw continued strength in group e-commerce sales that rose 14% vs last year at reported rates.
And it opened its first European monobrand boutique in Stockholm. Early trading is in line with expectations with five further showrooms opening this financial year.
Its growing pre-owned business looks strong too following the successful relaunch of Analog:Shift in the US and investment in its UK resource. Pricing and margins have been maintained.
And across the group’s US business, it saw a further acceleration with revenue of £152 million, up 76% at constant currency, and up 100% at reported rates.
In the UK, revenue grew 8% to £239 million, driven by resilient domestic clientele with strength across the country.
And it has seen an “ongoing improvement in airport business as traffic recovers”, with all airport showrooms now reopened.
While it continues to monitor the wider macro-economic environment, it believes “that the strength of the luxury watch category, with its unique supply/demand dynamics, together with the success and agility of our model will continue to support long-term sustainable strong sales growth”.
But it’s expecting the second half could be challenging and for FY23, it therefore continues to expect revenue of £1.45 billion-£1.5 billion and adjusted EBITDA to range from flat to up 0.5%.
Duffy added: “We continue to focus on attracting new clients and growing market share in the UK and US. We have seen positive early results from our expansion into Europe. As we continue to invest in our multichannel model and new incremental projects, we remain confident in our long range plan.
“We have an exciting and growing pipeline of new projects, and I am pleased to announce that we will relocate the current Rolex Boutique on Bond Street (900 sq ft) to a new 7,200 sq ft location on Old Bond Street in 2023. This new flagship will reflect the importance of the London market and the special relevance of London to the history of Rolex.”
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