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Luxury watch retailer Watches of Switzerland Group soared on Tuesday as it announced improved sales momentum and disclosed details of its new growth strategy.
At 570p per share, the Watches of Switzerland share price rose 9.8% and led the FTSE 250 higher.
Revenue rose slightly by 1% in the 13 weeks to October 29, to £379m. Excluding the impact of currency volatility, sales increased by 5% year-on-year.
The company said “demand for luxury watches remains robust and continues to outstrip supply”, with US sales up 4% year-on-year to £165m. This is an increase of 11% at stable exchange rates.
In the UK and mainland Europe, revenue was largely unchanged over the period at £214 million.
For the first half of the financial year, group sales fell slightly year-on-year to £761 million, while at constant currencies they increased by 2%. Revenue in the United States increased 5% (or 11% excluding currency effects), while revenue in Britain and the rest of Europe fell 4% on a reported and to-date basis. constant exchange rates.
Orientation unchanged
Sales of luxury watches – which account for almost nine-tenths of the group’s turnover – remained stable in the six months to October at £670 million, but rose 3% at stable exchange rates. .
Luxury jewelry sales, meanwhile, fell 17% (or 15% at unchanged exchange rates) to £47 million. Swiss watches declared that the reversal “[reflected] Market trends are driven by overall consumer confidence and a repositioning toward full-price sales in the United States.
The company kept its full-year estimates unchanged after these second-quarter numbers. Revenue is expected to increase between 8% and 11% at constant currencies, to between £1.65 billion and £1.7 billion.
Chief executive Brian Duffy said: “I am pleased to report improved trading performance in the second quarter, despite a challenging consumer environment.”
He added that “our proven business model, the strength of our brand partnerships, our international scale, our bold marketing campaigns and our commitment to exceptional customer service, continue to drive the company forward.”
Growth plan
Watches of Switzerland also unveiled a new growth plan through which it hopes to more than double its sales over the next five years.
By the end of the 2028 financial year, it hopes to record turnover in excess of £3 billion, up from £1.5 billion in the last financial year (to April 2023).
As part of these plans, the group will continue to modernize and expand its global showroom network, it said, as well as seek acquisitions. It plans to spend between £350m and £500m over the next five years to pursue this strategy.
Watches of Switzerland also expects to double its sales of luxury brand jewelry and pre-owned watches during the period.
Duffy said: “We are excited about the opportunities available to us in the second-hand market. [and] particularly through the new Rolex Certified Pre-Owned program, of which we plan to deliver 20% of new Rolexes to the US and 10% to the UK by FY 2028.
Swiss watch stocks fell in August after Rolex announced plans to enter the retail market by buying watch and jewelry seller Bucherer.
