Watches of Switzerland powers ahead in Q3 as demand outstrips supply
Watches of Switzerland reported continued strong luxury watch sales growth and increased momentum in the US market on Thursday as it delivered a trading update for Q3, the 13 weeks to January 26. And it also seems it be fairly resistant to the current downturn affecting the luxury segment linked to the coronavirus outbreak.
The listed company, which owns Goldsmiths and Mappin & Webb in the UK, Watches of Switzerland in the UK and US, and Mayors in the US only, also said its full-year performance is on track.
Group revenue at the company rose a healthy 12.8% to £257.9 million in Q3 and like-for-like sales were up 6.8%, “driven by continued strong luxury watch sales across UK and US with Online (UK) up 20.8%.”
The company also said that demand for key luxury watch brands continued to exceed supply, particularly over the festive trading period, and it made continued progress with its showroom portfolio elevation strategy. It refurbished three UK showrooms, including expansion of the Rolex boutique on Regent Street and relocation of the Omega boutique in Glasgow. It opened a new Goldsmiths showroom in Edinburgh and a new jewellery Fope boutique on Old Bond Street.
CEO Brian Duffy was upbeat as he said “we continue to capitalise on our market-leading position and strong brand partnerships”. And those partnerships are key as the firm is the UK’s largest retailer for Rolex, Cartier, Omega, TAG Heuer and Breitling watches.
Pleasingly, the sales performance during the third quarter was “broad-based with several brands delivering double-digit growth”. Its Christmas trading in the UK was strong “despite the competitive and promotional wider market backdrop” and holiday sales were also strong in the US in what were overall positive trading conditions. Its jewellery business performed well relative to the market too, with positive customer reaction to the new ranges, we’re told.
And talking of the US, Duffy added that the business there “continues to gain momentum, where the Mayors investment programme is successfully under way and generating a promising customer response. We continue to see significant growth potential for the group in the highly fragmented US luxury watch market”.
Looking ahead to the final quarter of the current financial year, improved visibility of luxury watch supply leaves it confident that it can meet its annual guidance.
But it’s continuing to monitor the effects of the ongoing coronavirus outbreak on the wider market and global trade. However, it said that “as demand for luxury watch brands in the UK and US continues to exceed supply, the strong fundamentals of our supply-driven business leave us well positioned to continue to deliver on our plans to leverage our leading position in the UK and to become a leader in the US in luxury watch retail.”
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