After experiencing an unusually tricky Q1, Watches of Switzerland (WoS) said it’s back on track in Q2 and it announced a major ‘Long Range Plan’ to more than double sales and profits between fiscal 2024 and fiscal 2028.

That might be a lofty plan for many, but not WoS. The high-performing luxury watch and jewellery retailer sees “multiple significant organic and inorganic growth opportunities across [the] UK, US and Europe” to support its rosy outlook.

Tuesday’s announcement comes after WoS suffered a rare dip in Q1 revenues when it admitted in August that supply issues failed to meet demand in its core UK/Europe operations. It was also up against tough year ago comparisons.

Fast forward to today and CEO Brian Duffy said the Plan “represents our strategy over the next five years to capitalise on our leading market positions and the unique growth opportunities available to us as the world’s largest luxury watch retailer.”

He added: “The Group is stronger than it has ever been, and we are tracking well ahead of the original plan we outlined in 2021, with a diverse pipeline of projects already scheduled for FY24, FY25 and FY26, which includes our strongest ever pipeline of committed Rolex projects.”

The big ambition is to surpass a milestone of £3 billion in revenue while “driving operational leverage and accelerating new showroom projects and M&A activity”.

Supporting this is the “exciting” opportunity in the pre-owned market, which it expects to deliver strong percentage growth in both the US and UK.

It also sees “significant growth potential” in the luxury branded jewellery market and is now “perfectly positioned to apply our market leading luxury watch model and expertise in elevating luxury brands to this growing category”.

These announcements come on the back of an improved Q2/H1 trading performance (in the 13 and 26 weeks to 29 October), “achieved within the difficult consumer environment”, it noted.

Admittedly, UK sales struggled in H1, but were supported by strength in the US market, although group adjusted EBIT for the period fell.

Highlights included that strong momentum in the US with sales up 11% at constant currency and positive early response to its Rolex Certified Pre-Owned programme. which launched in the UK in September, following the US launch in July. 

But the UK “exited the quarter strongly and returned to year-on-year growth in October”. This was delivered despite the impact of several high turnover Goldsmiths and Mappin & Webb showrooms being closed for upgrades and trading from pop-up locations during the quarter.  These will reopen pre-Christmas, it noted.

And another business bonus is its October agreement to acquire 19 luxury watch showrooms, including five monobrand boutiques from Ernest Jones in the UK. 

For Q2, group revenue rose 5% at constant currency (+1% reported) to £379 million. It said demand for luxury watches “remains robust and continues to exceed supply” while average selling prices continuing to increase.

No wonder WoS sees those “exciting opportunities” in its pre-owned business with sales growth of 88% in constant currency (+80% reported) vs the prior year.

In the US, revenues rose 11% at constant current (+4% reported) to £165 million.

UK and Europe revenue of £214 million was in line with prior year with performance, “continuing to be driven by domestic clientele across the UK”.

For H1, group revenue came in 2% ahead (reported sales flat) at £761 million. Luxury watch sales rose 3% (constant) and flat (reported) at £670 million, representing 88% of revenues.
Luxury jewellery fell 15% at constant currency, and was down 17% at reported rates to £47 million, “reflecting market trends impacted by overall consumer sentiment and by a repositioning to full price sales in the US”, it explained.
UK and Europe’s performance was driven by domestic clientele and saw revenue down 4% to £433 million. By contrast, strong momentum continued in the US market with revenue up 11% (reported +5%) to £328 million.
Group e-commerce sales fell 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 range £70million-£72 million, down from £87 million a year ago.

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