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Highlights
- The Watches of Switzerland reported excellent revenue growth, witnessing solid domestic demand for its products in the UK and the US market.
- The company expects half-yearly adjusted EBITDA to be £81 to £83 million and has updated its full-year revenue guidance.
The UK-based luxury watch retailer, The Watches of Switzerland Group (LON: WOSG), has reported a robust performance in its interim result for the 26 weeks ended 31 October 2021. The company witnessed strong domestic demand for its products in the UK and the US market following ease in lockdown restriction leading to higher footfall in its stores. Also, pent up demand for watches and jewellery has driven revenue growth.
Interim half-yearly result
The company reported excellent revenue growth. The total group revenue was at £586.2 million, a rise of 44.6% on a constant currency basis for the six months ended 31 October 2021. The UK market continued to contribute a significant part of the total revenue at £418.6 million, while the US market contributed £167.6 million in revenue.
The luxury watches segment generated a large part of the company’s revenue during the period. It contributed over 86% of the revenue at £508.8 million, while luxury jewellery contributed £40.8 million of the total revenue. Other non-core business activities contributed £36.6 million in revenue.
The overall solid performance was mainly due to higher volumes of non-supply constrained brands and product mix. As a result, the company expects half-yearly adjusted EBITDA to be £81 to £83 million. Following the robust half-yearly performance, the company has raised its full-year revenue guidance as well.
The Bond Connection
The company’s CEO, Brian Duffy, mentioned that the company witnessed massive demand for its latest series of Omega watches based on the new James Bond movie. Omega Seamaster Diver 300M 007 edition, which saw high demand in the US and the UK market after the release of the latest James bond movie ‘No Time to Die’.
Future Guidance
The company plans to expand its network in the US market and has agreed to acquire five new stores in four new states. After the acquisition gets completed, the company will have a network of 36 retail stores in 12 US states. Also, the company has updated its revenue guidance for the whole year:
- Estimated full-year revenue at £1.15 to £1.20 billion (previous guidance: £1.05 to £1.10 billion.)
- Capital Expenditure: £45.0 to £50.0 million (previous guidance: £40 to £45 million)
- Reduction in net debt in the range of £10 to £20 million (Previously: £20 to £30 million)
Is it a good time to invest in Watches of Switzerland Group?
The company operates in the consumer discretionary market segment offering luxury watches and jewellery through its chain of 158 retail stores and six different online stores across the UK and the US market. It provides products of various well-known brands like OMEGA, Rolex, Breitling, and many more. The company’s stock is a constituent of the FTSE250 index
The company has been reporting consistent growth in its organic revenue driven by underlying demand for luxury goods. The demand for the company’s products is expected to remain stable in upcoming quarters, which could boost the revenue. Also, the company is expanding its network in the US market, which could be beneficial for future growth.
Watches of Switzerland Group shares surged by 15% to GBX 1,304.00 on announcing optimistic guidance on 09 November 2021. The shares had a market cap of £2,715.4 million. In the last one year, the stock has given 201.5% returns to its shareholders.
