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Highlights
- Group revenue for H1 FY25 increased by 4% at constant currency, with luxury jewellery driving significant growth.
- US performance showed strong recovery, while UK & Europe experienced stabilization in the luxury sector.
- The Group remains confident in meeting FY25 targets, with continued investment in showroom expansions and new retail projects.
Watches of Switzerland Group PLC (LSE:WOSG) has reported steady growth and strategic progress for the first half of FY25, as the company continues to navigate a challenging market environment. For the 26 weeks to 27 October 2024, the Group posted a revenue of £785 million, reflecting a 4% increase at constant currency, or 3% at reported rates compared to the previous year. This growth marks a significant recovery after a slightly weaker performance in the first quarter, where revenue declined by 2%. However, in the second quarter, the company rebounded with an 11% increase in revenue at constant currency, signaling a positive trajectory ahead of the busy holiday season.
Despite the overall growth, the Group's luxury watch revenue experienced a slight dip of 2% in constant currency, or 3% reported. This decline was largely attributed to an increase in showroom stock levels, particularly in the US, aimed at enhancing the display and client experience. A notable achievement for the period was the strong performance of Rolex Certified Pre-Owned watches, which emerged as the Group's second-largest luxury watch brand. This growth in the pre-owned market highlights a growing trend of consumer interest in more sustainable luxury options.
In contrast, the Group's luxury jewellery segment saw a remarkable surge in sales, with revenue soaring 104% in constant currency, or 103% reported. This surge was mainly driven by the acquisition of Roberto Coin, which contributed £51 million to the Group's revenue. Excluding Roberto Coin, the Group’s UK luxury jewellery business showed positive growth of 4%, although the US market faced challenges, particularly in the commodity bridal category, which impacted sales.
The Group's adjusted EBIT for the first half of FY25 was £66 million, representing a 9% decline at constant currency, or a 10% decline at reported rates. This decrease was primarily due to a less favorable product mix and the lack of leverage on fixed costs as the business continued to adapt to shifting market dynamics. Statutory operating profit also decreased by 23% year-on-year, totaling £60 million. Despite these challenges, Watches of Switzerland remains focused on long-term growth, particularly in its strategic investments and showroom developments.
Regionally, the Group saw strong performance in the US, with revenue increasing by 11% at constant currency, reaching £355 million. A significant rebound occurred in the second quarter, where revenue growth surged to 24%, following a modest 1% decline in Q1. Meanwhile, UK and Europe revenue amounted to £430 million, a 1% decrease, although the region showed signs of stabilization, with a positive trend emerging in the second quarter.
Looking ahead to the full year, Watches of Switzerland remains confident in achieving its FY25 revenue guidance of £1.67 to £1.73 billion, representing growth of 9% to 12% at constant currency. The Group expects an improvement in its adjusted EBIT margin, with a targeted increase of 0.2 to 0.6 percentage points compared to FY24. Furthermore, capital expenditures are expected to range between £60 million and £70 million, primarily allocated to showroom refurbishments and new openings.
