TIDMWOSG
RNS Number : 8593I
Watches of Switzerland Group PLC
10 August 2023
10 August 2023
Watches of Switzerland Group PLC
Q1 FY24 Trading Update
for the 13 weeks to 30 July 2023
FY24 guidance reiterated reflecting a strong year of growth
Q1 Performance in line with expectations
Brian Duffy, Chief Executive Officer, said:
"We have delivered a Q1 performance in line with our guidance
and expectations, with ongoing strong progress in the US, where we
delivered 10% constant currency sales growth, and a performance in
the UK and Europe that reflected the unwind of the product intake
timing we benefited from in Q4 FY23.
"Q1 saw us make good ongoing progress against our strategic
growth priorities, including the opening of our new multi-brand
showroom in American Dream, New Jersey, continued refurbishment and
enhancement of our Goldsmiths Luxury, Mappin & Webb and Mayors
portfolio along with further mono-brand expansions, all of which
are trading in line with our expectations since opening. We also
successfully launched the Rolex Certified Pre-Owned programme in
the US in July 2023. Early performance has been encouraging as
clients react positively to the authenticity and guarantee of
quality that the Certified Pre-Owned seal represents. We are
excited about this opportunity and are on track to launch our UK
Rolex Certified Pre-Owned programme in September 2023.
"Looking ahead, we expect to return to more normalised growth
rates in the balance of the financial year. Our full year guidance
for another year of strong growth remains unchanged, underpinned by
our supply visibility, client Registration of Interest lists and
strong pipeline of showroom openings, refurbishment and investment,
as luxury watch demand continues to outstrip supply. We look
forward to presenting our Long Range Plan update in the Autumn,
which will outline our growth ambitions to FY28."
-- Group revenue GBP382 million (Q1 FY23: GBP391 million), -1%
at constant currency, -2% at reported rates
o Demand for luxury watches remains robust and continues to
exceed supply, with consistent additions to client Registration of
Interest lists and average selling prices continuing to
increase
o Revenue in line with guidance, Q1 revenue primarily reflected
unwinding of benefit of product intake in the UK in Q4 FY23 and
strong prior year comparatives, underpinned by a strong performance
in the US (+10% at constant currency)
o Luxury watch sales -2% to GBP336 million, representing 88% of
revenue (Q1 FY23: 87%)
o Luxury jewellery sales -15% vs the prior year. This reflects
market trends impacted by overall consumer sentiment and by a
repositioning to full price sales in the US
o Ecommerce sales -2% at reported rates against strong
comparatives in the prior year and impacted by the higher
proportion of jewellery sales through this channel
o Successful launch of US Rolex Certified Pre-Owned in mid-July.
Encouraging early client engagement and trading. On track to
commence UK Rolex Certified Pre-Owned in September 2023
Strong growth in US with revenue of GBP163 million, +10% vs Q1
FY23 at con stant currency, +7% at reported rates
o Sustained growth driven by higher volumes, reflecting success
of our model and the strength of client demand
o Watches of Switzerland multi-brand showroom in American Dream,
New Jersey opened in May and performing in line with
expectations
o Refurbishment and expansion of Mayors Dadeland, Florida opened
in May
o Opening of two mono-brand boutiques in Topanga with TAG Heuer
and Grand Seiko in May
-- UK and Europe revenue of GBP219 million, -8% vs Q1 FY23,
impacted by product intake timing, which benefited Q4 FY23
o Performance continues to be driven by resilient domestic
clientele with strength across the UK
o Ongoing improvement in airport business as traffic recovers,
with all airport showrooms open ahead of the summer holiday travel
period
o Showroom development programme continues with several projects
completed in the period and the benefits of our investment visible
in early trading:
-- Launched our first new contemporary showroom concept for
Mappin & Webb in York in June
-- Opened a new Goldsmiths Luxury showroom in Bromley alongside
a TAG Heuer boutique in July
-- Opened two mono-brand boutiques, Breitling and TAG Heuer, in
Cabot Circus, Bristol and one Breitling mono-brand boutique in York
in June
-- Opened our first mono-brand boutique in Berlin, Germany and
another mono-brand boutique in the Mall of Scandinavia, Stockholm,
both in partnership with TAG Heuer in July
o Accredited as a Living Wage Employer in the UK
Outlook
-- FY24 guidance remains unchanged, with a return to more
normalised growth in the balance of the financial year where we
will maintain performance against softer comparatives. 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
-- 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.GBP3 million
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: GBP23 - GBP27 million
-- The Group has an exciting schedule of new showroom projects for the remainder of FY24:
o Expansion of the mono-brand portfolio with 20 boutiques
planned across the UK, US and Europe
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, Liverpool and
Metrocentre Newcastle showrooms, and relocation of Trafford Centre
Manchester showroom, all in Winter 2023
-- Further roll-out of the Mappin & Webb contemporary format
in Guernsey in August, and Glasgow and Bluewater in Winter 2023
o Launch of Rolex Certified Pre-Owned in the UK in September
o Expansion of Rolex Boutique in Millenia (Orlando), Florida in
Autumn 2023
o Watches of Switzerland multi-brand showroom at One Vanderbilt,
New York due to open early 2024
-- In FY25:
o Old Bond Street Rolex flagship boutique due to open Summer
2024
o AP House in Manchester, via a Joint Venture partnership with
Audemars Piguet, due to open Autumn 2024
o Expanding Rolex boutique in Glasgow due to open Autumn
2024
o Relocating and expanding Watches of Switzerland multi-brand
showroom in Plano (Dallas), Texas with a new Rolex agency
-- 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.
Q1 FY24 Revenue Performance by Geography
Q1 FY24 Q1 FY23 Q1 FY24 vs
Q1 FY23
---------------
13 weeks 13 weeks YoY % Constant
to to currency
(GBPm) 30 July 31 July YoY %
2023 2022
--------- --------- ------ ----------
UK and Europe 219 239 -8% n/a
--------- --------- ------ ----------
US 163 152 +7% +10%
--------- --------- ------ ----------
Group Revenue 382 391 -2% -1%
--------- --------- ------ ----------
Q1 FY24 Revenue Performance by Category
Q1 FY24 Q1 FY23 Q1 FY24
vs Q1
FY23
------------------
13 weeks 13 weeks YoY %
to to
(GBPm) 30 July 31 July
2023 2022
--------- --------- --------
Luxury watches 336 342 -2%
--------- --------- --------
Luxury jewellery 23 27 -15%
--------- --------- --------
Other/services 23 22 +4%
--------- --------- --------
Group Revenue 382 391 -2%
--------- --------- --------
The financial information contained herein is unaudited.
Ecommerce revenue are sales which are transacted online.
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: 264094
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 30 July 2023, the Watches of Switzerland Group had 202
showrooms across the UK, US and Europe including 87 dedicated
mono-brand boutiques in partnership with Rolex, OMEGA, TAG Heuer,
Breitling, TUDOR, Audemars Piguet, 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 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 presentation.
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.
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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