Watches of Switzerland sees sales gain momentum and upgrades FY guidance

Watches of Switzerland Group has unveiled a further jump in revenue in a “solid” half-year trading update as demand for luxury timepieces continues to overtake supply.

The luxury watch and jewellery retailer, which listed on the main London market in 2019, has outlined how group revenue in the period ending October 30 came in at £765 million, up by nearly a third at reported rates. Sales of luxury watches were up by the same percentage to £667m, representing 87 per cent of total revenue, and seen as driven by increases in average selling price and volume.

The group hailed a "strong” UK performance driven by domestic clientele, with revenue up 8 per cent year on year to £454m, while adjusted earnings before interest and tax (ebit) for the period are expected to be £86m to £88m (up from £67m a year previously, when Watches of Switzerland said margins benefited from £5m of UK business rates relief).

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Mr Duffy praised “another quarter of strong trading driven by broad-based sales growth across our portfolio of world-leading partner brands”, adding that demand “continues to exceed supply”.

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He also said the first half has seen several showroom openings, including five at Battersea Power Station in London, and the first Tudor boutique in Scotland, on Glasgow’s Buchanan Street. In terms of guidance, the group expects full-year revenue to come in at £1.5 billion to £1.55bn (previous guidance was £1.45bn to £1.50bn), and adjusted ebit of £163m to £175m compared to previous guidance of £157m to £169m.

Mr Duffy added: “Our strong H1 performance underpins our full-year guidance, which we have upgraded to reflect the benefit of foreign exchange movements. Looking ahead, we remain confident in our Long Range Plan objectives, supported by a strong pipeline of expansionary projects as we continue with our strategy of investing for growth.”

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Analysts Eleonora Dani and Clive Black of Shore Capital deemed the trading update “solid”, with group revenues in line with expectations, and full-year guidance upped by about 4 per cent, reflecting in part the “strength of the luxury watch and jewellery categories in the current macroeconomic environment”.

Outlining a “buy” recommendation, they 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.”

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Sales of luxury watches reached £667m, representing 87 per cent of total revenue, driven by increases in average selling price and volume. Picture: contributed.
'Our strong H1 performance underpins our full-year guidance, which we have upgraded to reflect the benefit of foreign exchange movements,' says CEO Brian Duffy. Picture: contributed.

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