TIDMWOSG
RNS Number : 5586S
Watches of Switzerland Group PLC
07 November 2023
7 November 2023
Watches of Switzerland Group PLC
Q2 FY24 Trading Update
for the 13 weeks (Q2 FY24) and 26 weeks (H1 FY24) to 29 October
2023
Improved trading performance in Q2
FY24 guidance reiterated
Brian Duffy, Chief Executive Officer, said:
"I am pleased to report an improved Q2 trading performance,
notwithstanding the difficult consumer environment. Our proven
business model, the strength of our brand partnerships,
international scale, bold marketing campaigns and dedication to
exceptional client service, continues to drive the business
forward.
"We sustained strong momentum in the US where we delivered +11%
constant currency sales growth. We are also encouraged by the early
response to the Rolex Certified Pre-Owned programme which launched
in the UK in September, following the US launch in July, as clients
react strongly to the authenticity and guarantee of quality that
the Certified Pre-Owned seal represents. The UK performance was
delivered despite the impact of several high turnover Goldsmiths
and Mappin & Webb showrooms being closed for upgrade and
trading from pop-up locations during the quarter. These will reopen
pre-Christmas. The UK business exited the quarter strongly,
returning to year-on-year growth in October.
"We have been focused on developing our network of luxury
showrooms across the UK, US and Europe in the period, including the
continued roll-out of the Goldsmiths Luxury showroom format, the
Mappin & Webb contemporary concept, the refurbishment of the
Rolex boutique in Millenia, Orlando and new mono-brand
boutiques.
"I am delighted to announce that, in October 2023, we agreed to
acquire 19 luxury watch showrooms, including five mono-brand
boutiques from Ernest Jones in the UK. I would like to welcome our
new colleagues in the luxury showrooms we have acquired from Ernest
Jones. We believe these are great showrooms and highly
complementary to our portfolio. During the balance of the fiscal
year, we will be working on systems, merchandising, training and
marketing in order to have the full beneficial impact from this
acquisition in FY25.
"In the second half, our major showroom upgrades in the UK will
reopen pre-Christmas along with the reopening of our US Rolex
boutique at Millenia, Orlando. That, combined with our sequential
sales improvement over the quarter means we reiterate our FY24
guidance. Our business is well planned and our teams full of
enthusiasm for the upcoming holiday season. We are also delighted
to announce our Long Range Plan update today, which we have
published separately, outlining our growth ambitions to FY28."
Q2 FY24 Highlights:
Group revenue GBP379 million (Q2 FY23: GBP374 million), +5% at
constant currency, +1% at reported rates
-- Demand for luxury watches remains robust and continues to
exceed supply, with consistent additions to and conversions of the
client Registration of Interest lists, and average selling prices
continuing to increase
-- Group Pre-Owned sales growth +88% in constant currency vs prior year (+80% reported)
-- US revenue of GBP165 million, +11% at constant currency, +4%
at reported rates vs prior year
-- Sustained growth in core business, reflecting the success of
our model and strength of client demand
-- Luxury watch sales strong across brands and price points
-- Watches of Switzerland American Dream, New Jersey, fully
complete with Cartier space opened in October 2023
-- Six new mono-brand boutiques opened in the US for Breitling,
TAG Heuer and Grand Seiko. Three at Canal Place, New Orleans
(opened August 2023) and three at Fashion Place, Utah (opened
October 2023)
-- UK and Europe revenue of GBP214 million, in line with prior year
-- Performance continues to be driven by domestic clientele across the UK
-- Several high turnover Goldsmiths and Mappin & Webb
showrooms were closed for upgrade during the period and were
trading out of pop-ups. These reopen pre-Christmas in the second
half of the fiscal year
-- Successful launch of Rolex Certified Pre-Owned in the UK in
September 2023. Encouraging early client engagement and trading
-- Agreed purchase of 19 luxury watch showrooms from Ernest
Jones, comprising of 14 multi-brand showrooms and five mono-brand
boutiques
o Acquisition will complete in November 2023
o Multi-brand showrooms re-branded to Goldsmiths or Mappin &
Webb
o During the balance of the fiscal year, we will be working on
systems, merchandising, training and marketing in order to have the
full beneficial impact from this acquisition in FY25
-- Showroom development programme continues with several
projects completed in the period and the benefits of our investment
visible in early trading:
o Further enhancement of our Goldsmiths estate through the
extensive expansion and refurbishment of a number of Goldsmiths
showrooms, most notably Liverpool, which represents our largest
Goldsmiths Luxury showroom to date (reopened in September 2023)
o Continued development of Mappin & Webb contemporary
concept with the refurbishment and expansion of Mappin & Webb
Guernsey including major branded spaces for Rolex, OMEGA and
Breitling along with a jewellery gallery for Mappin & Webb and
branded luxury jewellery
o Mono-brand boutiques opened for Breitling Newcastle and Bath
and a further TAG Heuer mono-brand boutique opened in Bath
o Further European expansion through the opening of a new
Breitling boutique in Gothenburg, Sweden. This takes the total
number of European mono-brand boutiques to nine
H1 FY24 Highlights:
Group revenue GBP761 million (H1 FY23: GBP765 million) +2% at
constant currency, flat at reported rates
-- Luxury watches revenue of GBP670m, +3% at constant currency,
flat at reported rates, representing 88% of revenue (H1 FY23:
87%)
-- Luxury jewellery -15% at constant currency, -17% at reported
rates to GBP47 million. This reflects market trends impacted by
overall consumer sentiment and by a repositioning to full price
sales in the US
-- Continued strong momentum in the US with revenue of GBP328
million (H1 FY23: GBP311 million), +11% at constant currency, +5%
at reported rates
-- UK and Europe performance driven by domestic clientele, with
revenue of GBP433 million (H1 FY23: GBP454 million), -4% vs H1
FY23
-- Group ecommerce sales -4% on last year at reported rates
against strong comparatives in the prior year and impacted by the
higher proportion of jewellery sales through this channel
-- H1 FY24 Adjusted EBIT is expected to be GBP70 million to
GBP72 million (H1 FY23: GBP87 million) - limited leverage in H1
FY24 alongside headwinds from Interest Free Credit which annualise
in the second half of the year
Outlook
-- FY24 guidance for sales and profit remains unchanged, based
on our sequential trading improvement and the large showroom
refurbishments reopening pre-Christmas. Our guidance does not
reflect any expectation of an improvement in consumer confidence in
the remainder of the financial year. Guidance reflects current
visibility of supply from key brands and confirmed showroom
refurbishments, openings and closures, and excludes uncommitted
capital projects and acquisitions
-- The Group has an exciting schedule of new showroom projects for the remainder of FY24:
o Relocation of Rolex boutique Millenia, Orlando to a showroom
three times the previous size, opens November 2023
o Continued refurbishment and expansion of the showroom network
including:
-- Continued roll-out of Goldsmiths Luxury showroom format,
including the expansion of the Birmingham Bullring, and Metrocentre
Newcastle showrooms, and relocation of Trafford Centre Manchester
showroom, all in Winter 2023
-- Further roll-out of the Mappin & Webb contemporary format
with refurbishments in Glasgow and Bluewater in Winter 2023 and a
new Mappin & Webb showroom in Edinburgh
o Watches of Switzerland multi-brand showroom at One Vanderbilt,
New York due to open early 2024
o Expansion of the mono-brand portfolio with four boutiques
planned across the UK, US and Europe
-- FY24 guidance (on an organic pre-IFRS 16 basis):
o Revenue: GBP1.65 - GBP1.70 billion, growth of
8-11% at constant currency
o Adjusted EBIT margin In line with FY23
%:
o Total finance costs: c.GBP5 million (increase reflects the
impact of the acquisition)
o Underlying tax rate: 27% - 28% reflecting the increase in
UK corporation tax
o Capex: GBP70 - 80 million
o Operating cash conversion: c.70% weighted towards H2 in line with
the seasonal pattern
The equivalent guidance on an IFRS 16 basis is:
o Adjusted EBIT margin In line with FY23
%:
o Total finance costs: GBP26 - GBP30 million (increase reflects
the impact of the acquisition)
-- The Group is exposed to movements in the GBP/$ exchange rate
when translating the results of its US operations into Sterling.
The actual average exchange rate for FY23 was 1.20
Q2 FY24 Revenue Performance by Geography
Q2 FY24 Q2 FY23 Q2 FY24 vs
Q2 FY23
---------------
13 weeks 13 weeks
to to Constant
(GBPm) 29 Oct 30 Oct Reported currency
2023 2022 YoY % YoY %
--------- --------- --------- -------------
UK and Europe 214 215 0% 0%
--------- --------- --------- -------------
US 165 159 +4% +11%
--------- --------- --------- -------------
Group Revenue 379 374 +1% +5%
--------- --------- --------- -------------
H1 FY24 Revenue Performance by Geography
H1 FY24 H1 FY23 H1 FY24 vs
H1 FY23
---------------
26 weeks 26 weeks
to to Constant
(GBPm) 29 Oct 30 Oct Reported currency
2023 2022 YoY % YoY %
--------- --------- --------- -------------
UK and Europe 433 454 -4% -4%
--------- --------- --------- -------------
US 328 311 +5% +11%
--------- --------- --------- -------------
Group Revenue 761 765 0% +2%
--------- --------- --------- -------------
Q2 FY24 Revenue Performance by Category
Q2
------------------
13 weeks 13 weeks
to to Constant
(GBPm) 29 Oct 30 Oct Reported currency
2023 2022 YoY % YoY %
--------- --------- --------- -----------
Luxury watches 333 325 +3% +6%
--------- --------- --------- -----------
Luxury jewellery 24 29 -18% -16%
--------- --------- --------- -----------
Services/other 22 20 +8% +9%
--------- --------- --------- -----------
Group Revenue 379 374 +1% +5%
--------- --------- --------- -----------
H1 FY24 Revenue Performance by Category
H1
------------------
26 weeks 26 weeks
to to Constant
(GBPm) 29 Oct 30 Oct Reported currency
2023 2022 YoY % YoY %
--------- --------- --------- -----------
Luxury watches 670 667 0% +3%
--------- --------- --------- -----------
Luxury jewellery 47 56 -17% -15%
--------- --------- --------- -----------
Services/other 44 42 +6% +7%
--------- --------- --------- -----------
Group Revenue 761 765 0% +2%
--------- --------- --------- -----------
The financial information contained herein is unaudited.
Adjusted EBIT is EBIT before exceptional items shown on a
pre-IFRS 16 basis .
Ecommerce revenue are sales which are transacted online.
Certain financial data within this announcement has been
rounded. Growth rates are calculated on unrounded numbers.
Conference call
A conference call for analysts and investors will be held at
9.00am (UK time) today. To join the call, please use the following
details:
Dial-in: +44 20 4587 0498
Conference access code: 398336
Contacts
The Watches of Switzerland Group
Anders Romberg, CFO +44 (0) 207 317 4600
Caroline Browne, Group Finance Director
+44 (0) 1162 817 420
investor.relations@thewosgroup.com
Headland
Lucy Legh / Rob Walker / Joanna Clark +44 (0) 20 3805 4822
wos@headlandconsultancy.com
About the Watches of Switzerland Group
The Watches of Switzerland Group is the UK's largest luxury
watch retailer, operating in the UK, US and Europe comprising five
prestigious brands; Watches of Switzerland (UK and US), Mappin
& Webb (UK), Goldsmiths (UK), Mayors (US) and Betteridge (US),
with a complementary jewellery offering.
As at 29 October 2023, the Watches of Switzerland Group had 211
showrooms across the UK, US and Europe including 97 dedicated
mono-brand boutiques in partnership with Rolex, OMEGA, TAG Heuer,
Breitling, TUDOR, Audemars Piguet, Longines, Grand Seiko, BVLGARI
and FOPE and has a leading presence in Heathrow Airport with
representation in Terminals 2, 3, 4 and 5 as well as seven retail
websites.
The Watches of Switzerland Group is proud to be the UK's largest
retailer for Rolex, OMEGA, Cartier, TAG Heuer and Breitling
watches.
www.thewosgroupplc.com
Disclaimer
This announcement has been prepared by Watches of Switzerland
Group PLC (the 'Company'). It includes statements that are, or may
be deemed to be, "forward-looking statements". These
forward-looking statements can be identified by the use of
forward-looking terminology, including the terms "believes",
"estimates", "anticipates", "expects", "intends", "plans", "goal",
"target", "aim", "may", "will", "would", "could" or "should" or, in
each case, their negative or other variations or comparable
terminology. They appear in a number of places throughout this
announcement and the information incorporated by reference into
this announcement and may include statements regarding the
intentions, beliefs or current expectations of the Company
Directors or the Group concerning, amongst other things: (i) future
capital expenditures, expenses, revenues, earnings, synergies,
economic performance, indebtedness, financial condition, dividend
policy, losses and future prospects; (ii) business and management
strategies, the expansion and growth of the Group's business
operations; and (iii) the effects of government regulation and
industry changes on the business of the Company or the Group.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future and may be
beyond the Company's ability to control or predict. Forward-looking
statements are not guarantees of future performance. The Group's
actual results of operations, financial condition, liquidity, and
the development of the industry in which it operates may differ
materially from the impression created by the forward-looking
statements contained in this announcement and/or the information
incorporated by reference into this announcement.
Any forward-looking statements made by or on behalf of the
Company or the Group speak only as of the date they are made and
are based upon the knowledge and information available to the
Directors on the date of this announcement, and are subject to
risks relating to future events, other risks, uncertainties and
assumptions relating to the Company's operations and growth
strategy, and a number of factors that could cause actual results
and developments to differ materially from those expressed or
implied by the forward-looking statements. Undue reliance should
not be placed on any forward-looking statements and, except as
required by law or regulation, the Company undertakes no obligation
to update these forward-looking statements. No statement in this
announcement should be construed as a profit forecast or profit
estimate.
Before making any investment decision in relation to the Company
you should specifically consider the factors identified in this
document, in addition to the risk factors that may affect the
Company or the Group's operations as detailed above.
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