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Watches of Switzerland Group valued at £2.5 billion after ‘very good start to the financial year’

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Goldsmiths, The Trafford Centre. credit: leeboswellphotography.com

Watches of Switzerland Group (WoSG) was valued at £2.5 billion this morning after a further uptick in its share price in early trading following another stellar quarter of financial results.

WoSG runs the retailers Watches of Switzerland, Goldsmiths and Mappin & Webb in the UK, and Mayors in the US.

Sales for the 13 weeks to August 1 (Q1 FY21) doubled compared the same period last year.

That quarter in 2020 was affected by stores being closed for six of the 13 weeks in the UK and four in the United States, but group sales for Q1 FY21 were also up 46% up over the same period in the pre-pandemic year of 2019.

Brian Duffy.

“We have had a very good start to the new financial year with a further acceleration in momentum, versus pre-Covid 19 pandemic growth levels, underpinned by diversified growth across our markets and categories,” said WoSG CEO, Brian Duffy.

A lack of tourists shopping at airports and prime central London stores has been offset by strong domestic demand, according to Duffy.

“Trading in the UK has been extremely strong, driven by sustained high demand from domestic clientele. Our newly opened and refurbished stores have performed well, whilst our e-commerce business has also continued to grow impressively, proving the effectiveness of our multi-channel model despite the strong prior-year comparator,” he explained.

He reported that Stateside sales are up 95% versus Q1 FY21 and 53.6% against Q1 FY20.The group’s American business has always been mainly to domestic customers, or internal tourists to cities including New York, Las Vegas and Miami.

“Our US business goes from strength to strength, with excellent, broad-based growth continuing to characterise our performance in this market. Both luxury watches and luxury jewellery are performing strongly and our refurbished Mayors stores have continued to generate significant sales uplifts. We continue to invest in digital marketing initiatives to drive brand awareness, including through our recently introduced ‘Anywhere, Anytime’ campaign,” he said.

Financial highlights

  • Group revenue £297.5 million (Q1 FY21: £151.6 million), +101.9% in constant currency, +96.2% in reported terms relative to Q1 FY21 and +45.8% in constant currency relative to Q1 FY20
  • Continued high conversion and strong domestic sales despite subdued store traffic
  • In the prior year period (Q1 FY21), COVID-19 lock downs resulted in store closures of six weeks in the UK and four weeks in the US
  • Luxury watches +97.1% to £259.3 million, representing 87.1% of revenue (Q1 FY21: 86.8%)
  • Luxury jewellery also performing well +98.9% to £20.1 million
  • Group e-commerce sales +15.9% vs last year, maintaining strong momentum despite UK stores being open during the period
  • Digital marketing, CRM and clienteling continue to play an important role in driving customer engagement and business performance
  • Q1 FY22 benefitted from reduction of in-store stock on key brands
  • Net cash of £23.2 million as at 1 August 2021 (Net debt as at 26 July 2020: £(92.1) million)

WoSG in the United States

  • Further acceleration in the US with revenue of £75.8 million, +95.0% vs Q1 FY21 and +53.6% vs Q1 FY20 (both in constant currency)
  • Continuing the trend seen in Q4 FY21, growth has been driven by higher volumes
  • Recovery of traffic into Las Vegas and New York is driving accelerated momentum in our stores
  • Eight mono-brand boutiques recently opened are performing strongly and gathering pace
  • E-commerce sales continue to gain momentum following recent online launch

WoSG in the UK

  • Significant step change in UK sales growth with revenue of £221.7 million, +104.7% vs Q1 FY21, and
    +43.0% vs Q1 FY20
  • In addition to positive mix effects, growth has also been supported by higher volumes
  • Sustained high demand from domestic clientele has continued to drive performance
  • Multi-channel strategy continues to deliver strong results
  • Store development programme continues to work well with a number of projects completed in the period including a new Goldsmiths store and two new mono-brand boutiques in Edinburgh and one new mono-brand boutique in Manchester

Looking ahead, the group says its forward guidance is unchanged from the end of its prior financial year and it expects strong performance in both the United States and UK.

In its previous report, the group said it was in a position to accelerate expansion in the United States and Continental Europe with acquisitions.

There was no update on this plan in the Q1 report.

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