Jul 7, 2022
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Watches of Switzerland powers ahead in UK and US

Jul 7, 2022

Watches of Switzerland Group is continuing its seemingly unstoppable rise with the high-end watches and jewellery retailer reporting record annual results on Thursday.

Watches of Switzerland

For the year to 1 May (FY22), it said revenue surged 40% and adjusted EBIT was up 68%, with its performance driven by the strength of its model, good market conditions and international development. And it has seen a strong start to FY23 “with waitlists extending”.

CEO Brian Duffy called it a tremendous year for the group, producing record sales and profits. It is particularly pleasing to have delivered this performance against such strong prior year comparatives.”

The group owns the Watches of Switzerland chain, plus Mappin & Webb, Goldsmiths, Mayors, and Betteridge. It also operates mono brand showrooms for Rolex, Omega, TAG Heuer, Breitling, Tudor, Audemars Piguet, Grand Seiko, Bulgari and Fope.

As mentioned, revenue was up 40% on a strictly comparable basis, or up 37% on the reported basis (given that there were 52 weeks in the latest financial year and 53 weeks in the previous one). Revenue reached £1.238 billion.

Adjusted EBITDA rose 54% to £162 million, and adjusted EBIT was up close to 70% at £130 million. Statutory operating profit rose 74% to £142 million and statutory pre-tax profit nearly doubled to £126 million.

The performance was strong in both of its key markets with constant currency sales in the UK up 36% to £810 million and in the US they jumped 48% to £428 million.

It’s seeing continued strong demand for luxury watches and luxury jewellery and average selling price (ASP) growth across brands.

It also said group e-commerce sales grew a further 5% on the prior year (and were up 128% vs FY20), and it has made good progress with its store expansion and refurbishment programme.

FY22 luxury watch sales were up 36% on the last year, “with demand for luxury watches continuing to be strong in both the UK and US, consistently exceeding supply”. And luxury jewellery sales grew 86%, “reflecting a strong market, continued improvement in ranging, incremental growth from the Betteridge acquisition and the opening of our first Bulgari monobrand boutique”.

The company also said that travel retail in the UK has grown “exponentially since the global relaxation of pandemic restrictions, although passenger numbers and global travel remains below pre-pandemic levels”. Passenger numbers improved over the Easter holiday period and it expects strong passenger numbers over the summer.  However, “since the removal of tourist VAT-free shopping on Brexit, we do not believe conversion at the airports will achieve pre-Brexit levels”. 

It has renegotiated the contracts for its showrooms in Heathrow Airport on revised terms, “which retains profitability at lower passenger levels”.

Given that the company has just begun its expansion into Europe, having opened one monobrand boutique with Breitling in Stockholm  last month, it’s to be hoped that the current financial year will also be a strong one. The company said it has secured a further five monobrand boutiques in Sweden, Denmark and Republic of Ireland that will open in FY23.

Its guidance for the current year is that on a pre-IFRS 16 basis, revenue should be £1.45 billion-£1.5 billion, although adjusted EBITDA will only range between flat and up 0.5%.

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