The Watches of Switzerland Group was sailing towards its financial year end with sales up by 15.8% for the 46 weeks up until March 15.
Then the Coronavirus pandemic hit, forcing the group to close all of its US stores on March 19 and its UK stores on March 23.
They were still closed until the financial year end on April 26, although there have been some Mayors stores reopening in Florida and Georgia. Stores remain closed throughout the UK, as well as in New York, Las Vegas and Boston.
Had the group maintained growth of 15.8% through to the end of the financial year, turnover would have risen from £773.5 million to £895.7 million.
It might have been higher still, because sales to overseas visitors to prime Central London stores and airport boutiques at London Heathrow and Gatwick are likely to have been affected as travel restrictions came into force earlier in the year.
The shutdown trimmed annual growth from 15.8% to 5.9%, finishing the financial year at £819.3 million. Had sales growth of 15.8% continued for another six weeks up to the end of the financial year, it would likely have added £76.4 million or £12.7 million per week.
WOSG’s final results were better than advice given to the London Stock Exchange soon after lockdown because ecommerce sales were higher than expected, up 45.8% during the six weeks of lock down compared to the same period in 2019.
Since the financial year end, ecommerce sales have accelerated even faster, rising by 82.8% year-on-year in April.
The group says it generated additional revenue and cash during the period through enhanced clienteling initiatives (effectively the sales team directly contacting their best customers) in the UK and US.
The group’s share price was unmoved this morning at £2.20, a significant discount from its 52-week high of £3.97, but not far below its initial public offering price of £2.75.
UK sales for 52 weeks to 26 April 2020 were up 0.6% to £591.6 million while US sales rose by 22.9% to £227.7 million.
Earnings for the financial year are expected to be between £75 million and £78 million, up from £68.8 million in 2019.
Luxury watch sales accounted for 83.7% of group turnover, up from 81.6%, and the group’s chief executive Brian Duffy says he thinks the potential of the watch market will still be limited more by a shortage of supply than any fall-off in demand for the biggest brands.
“We remain confident the strong fundamentals that underpin the luxury watch category remain intact and will do so as we emerge from the current situation. Luxury watches continue to be a supply-driven segment with robust demand and unique value preservation characteristics,” Mr Duffy says.
“Longer term, we are well positioned to deliver on our plans to leverage our leading position in the UK and become a leader in the US luxury watch market.”
A financial statement accompanying the results says the group had net debt of £131.4 million on 26 April 2020 and has secured a new £45 million facility since the year end.