City reaction: Watches of Switzerland sees sales tick up in 'solid' Q1 trading update

Luxury goods retailer Watches of Switzerland Group, led by Glasgow-born chief executive Brian Duffy, has clocked up “strong” momentum in the first quarter, saying the UK saw major growth on the back of pent-up, post-lockdown demand.

The firm, which floated on the London Stock Exchange in 2019, in a trading update unveiled group revenue amounting to £391 million for the 13 weeks ending July 31, up 25 per cent year on year on a constant currency basis, and 31 per cent at reported rates. UK sales specifically reached £239m, jumping 8 per cent.

Mr Duffy highlighted the group’s plans to move its 900-square-foot Rolex Boutique on the UK capital’s Bond Street to a 7,200-sq-ft outlet on Old Bond Street next year. “This new flagship will reflect the importance of the London market and the special relevance of London to the history of Rolex,” he said, having earlier this year flagged plans to boost the company’s store network in Scotland.

Looking at the firm’s latest figures, he 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... we remain confident in our long-range plan."

The firm reiterated its previous full-year guidance on an organic pre-IFRS 16 basis, saying this anticipates a possibly tougher trading environment in the second half. It expects revenue to be £1.45 billion to £1.5bn, and adjusted earnings before interest and taxes to be £157m to £169m.

Analyst Eleonora Dani of Shore Capital deemed the trading update “solid”, and showing that the group’s growth is “broad-based”; its luxury watches arm saw sales increase 32 per cent to £342m, with luxury jewellery enjoying a jump of more than a third to reach £27m.

Ms Dani noted that the group’s shares have fallen by about 42 per cent since the start of the year, “and we believe that the valuation is relatively undemanding given the potential growth trajectory in the fragmented US and EU markets”.

'We remain confident in our long range plan... We have an exciting and growing pipeline of new projects,' says boss Brian Duffy. Picture: contributed.

Highlighting Shore Capital’s “buy” rating for Watches of Switzerland, she added: “Demand for luxury watches continues to outstrip supply. In our view, this is a management team executing its strategy well, and adapting to dynamic market conditions.”