TIDMWOSG
RNS Number : 7204R
Watches of Switzerland Group PLC
09 November 2021
Watches of Switzerland Group PLC
Q2 FY22 Trading
for the 13 weeks (Q2 FY22) and 26 weeks (H1 FY22) to 31 October
2021
Better than anticipated first half performance leads to upgrade
in full year outlook
US expansion strategy advanced with acquisitions of five stores
agreed
Watches of Switzerland Group PLC ("the Group") today provides
the following update relating to the 13 and 26 weeks ending 31
October 2021.
Strong performance achieved in H1 FY22, driven by broad-based
and margin-enhancing growth in the UK and the US against both last
year and two years ago
-- Group revenue GBP586.2 million (H1 FY21: GBP414.3 million)
+44.6% vs H1 FY21 and +40.8% vs H1 FY20 (both in constant
currency)
o Continued strong demand environment for luxury watches and
jewellery, with growth in the period led by a significant increase
in volumes of non-supply constrained brands
o Group ecommerce sales +28.7% on last year, despite stores
having been fully opened in H1 FY22
-- Robust UK performance continues to be generated by a thriving
domestic clientele, with revenue GBP418.6 million +42.3% vs H1
FY21
o Revenue +31.8% vs H1 FY20 when 33.6% of Group sales were
generated by tourists and airports vs negligible tourist and much
reduced airport business in H1 FY22
-- Strong momentum in the US with revenue GBP167.6 million,
+50.2% vs H1 FY21 and +66.7% vs H1 FY20 (both in constant
currency)
-- Net cash [1] of GBP30.0 million as at 31 October 2021 (net
debt as at 25 October 2020: GBP(22.7) million)
-- Following a strong sales performance with a margin-accretive
product mix and further operating leverage, H1 FY22 Adjusted EBITDA
[2] is expected to be GBP81.0 million to GBP83.0 million (H1 FY21:
GBP52.2 million)
-- As a result of first half performance and acquisition
agreements, guidance for the full year has been raised
US expansion strategy further advanced with agreements to
purchase five stores in four new states [3]
-- Combined annual revenue of approximately $100.0 million;
future profitability expected to be in line with the Group's US
average
-- Stores located in Plano (Dallas), Texas; Vail and Aspen,
Colorado; Greenwich, Connecticut; and Minneapolis, Minnesota
-- These acquisitions will bring the US store network to 22
multi-brand and 14 mono-brand boutiques to reach a total
representation of 36 stores in 12 states
Good trading performance in Q2 FY22 against a strong prior year
comparable and achieved whilst rebuilding stock on Rolex
-- Group revenue GBP288.7 million (Q2 FY21: GBP262.7 million),
+11.8% in constant currency, +9.9% in reported terms vs Q2 FY21 and
+36.2% in constant currency vs Q2 FY20
-- Following a period of destocking during Q1 FY22, the Group
actively re-built store stock for Rolex in the US and the UK to
reach an appropriate level of brand representation
-- UK revenue of GBP196.9 million, +6.0% vs Q2 FY21 and +21.1%
vs Q2 FY20, driven by other luxury watches and jewellery
-- Strong momentum continues in the US, with revenue of GBP91.8
million, +25.9% vs Q2 FY21 and +79.6% vs Q2 FY20 (both in constant
currency)
-- Continued investment in the Group's store estates in the US and the UK:
o Opening of enhanced Rolex dedicated space within Mayors
Aventura, Phase I of the store's refurbishment plan
o Introduction of first Goldsmiths Luxury concept in two stores
(Canterbury and Reading)
o Refurbishment of a further five stores in the UK
o Opening of three mono-brand boutiques in Plymouth
Outlook
-- The Group has continued to generate strong growth and make
further progress on its strategic objectives during the year, with
investments yielding positive results and newly announced
acquisitions contributing towards Long Range Plan goals
-- As a result, the Group today upgrades its guidance for the full year
-- Our guidance reflects visibility of supply of key brands. The
Group does not expect the return of tourism and airport business to
pre-pandemic levels during the year
-- The Group's guidance for FY22 on a 52-week, pre-IFRS 16 basis, is as follows:
o Revenue: GBP1.15 billion to GBP1.20 billion (previous guidance
GBP1.05 billion to GBP1.10 billion)
o EBITDA and Adjusted EBITDA margin %: +1.0% to +1.5% vs last
year (previous guidance flat to +0.5% vs last year)
o Depreciation, amortisation, impairment and profit/loss on
disposal of fixed assets: GBP30.0 million to GBP32.0 million (no
change vs previous guidance)
o Total finance costs: GBP4.0 million to GBP4.5 million (no
change vs previous guidance)
o Underlying tax rate: 21.0% to 22.5% (no change vs previous
guidance)
o Capex: GBP45.0 million to GBP50.0 million (previously GBP40.0
million to GBP45.0 million)
o Net debt: GBP10.0 million to GBP20.0 million (previously
GBP20.0 million to GBP30.0 million)
o Average USD/GBP full year rate of $1.40 (no change vs previous
guidance)
-- H1 FY22 Results will be published on 9 December 2021
Brian Duffy, Chief Executive Officer, said:
"We are very pleased with our first half performance. Over the
last two years, we have demonstrated the versatility of our
multi-channel model with a more than doubling of sales to domestic
clients and within this half year, a significant change in brand
mix.
"We have enjoyed re-connecting with customers in our stores
whilst further elevating the experience by retaining several
initiatives and enhancements introduced during the COVID-19
pandemic. We have further expanded the Luxury Watch and Jewellery
Virtual boutique in the UK, continued to grow the "By Personal
Appointment" business which now accounts for approximately 40.0% of
UK sales and continued to enhance CRM, clienteling and digital
marketing initiatives. Our teams have been fantastic in embracing
all modes of customer engagement, driving growth across all
channels throughout this period.
"We continue to build on a growing foundation in the US, further
strengthening our position through the agreement to purchase five
stores in four new states.
"The strength of our performance, both in our well-established
UK business and in our growing US business, coupled with our
confidence in the luxury watch and jewellery categories has led us
to upgrade our guidance for the full year. We are well stocked for
the holiday period and look forward to providing an exceptional
shopping experience for our customers. I would also like to take
this opportunity to thank my colleagues for their dedication and
enthusiasm and to welcome our new colleagues to the business."
H1 FY22 Revenue Performance by Geography
H1 FY22 H1 FY21 H1 FY22 vs H1 H1 FY22 vs H1
FY21 FY20
---------------
26 weeks 26 weeks Constant 2-year
(GBPm) to to currency 2-year constant
31 Oct 25 Oct Reported YoY % Reported currency
2021 2020 YoY % YoY % YoY %
--------- --------- --------- ------------- ---------- -------------
UK 418.6 294.2 42.3% 42.3% 31.8% 31.8%
--------- --------- --------- ------------- ---------- -------------
US 167.6 120.1 39.5% 50.2% 50.9% 66.7%
--------- --------- --------- ------------- ---------- -------------
Group Revenue 586.2 414.3 41.5% 44.6% 36.7% 40.8%
--------- --------- --------- ------------- ---------- -------------
Q2 FY22 Revenue Performance by Geography
Q2 FY22 Q2 FY21 Q2 FY22 vs Q2 Q2 FY22 vs Q2
FY21 FY20
---------------
13 weeks 13 weeks 2-year
to to Constant 2-year constant
(GBPm) 31 Oct 25 Oct Reported currency Reported currency
2021 2020 YoY % YoY % YoY % YoY %
--------- --------- --------- ------------- ---------- ----------
UK 196.9 185.9 6.0% 6.0% 21.1% 21.1%
--------- --------- --------- ------------- ---------- ----------
US 91.8 76.8 19.5% 25.9% 62.0% 79.6%
--------- --------- --------- ------------- ---------- ----------
Group Revenue 288.7 262.7 9.9% 11.8% 31.6% 36.2%
--------- --------- --------- ------------- ---------- ----------
Q2 and H1 FY22 Revenue Performance by Category
Q2 H1
------------------
13 weeks 13 weeks 26 weeks 26 weeks
to to to to
(GBPm) 31 Oct 25 Oct Reported 31 Oct 25 Oct Reported
2021 2020 YoY % 2021 2020 YoY %
--------- --------- --------- --------- --------- ---------
Luxury watches 249.6 230.5 8.2% 508.8 362.1 40.5%
--------- --------- --------- --------- --------- ---------
Luxury jewellery 20.7 16.4 25.4% 40.8 26.3 53.3%
--------- --------- --------- --------- --------- ---------
Other 18.4 15.8 18.3% 36.6 25.9 43.2%
--------- --------- --------- --------- --------- ---------
Group Revenue 288.7 262.7 9.9% 586.2 414.3 41.5%
--------- --------- --------- --------- --------- ---------
Conference call
A webcast 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 (UK): 0800 279 7209
Dial-in (all other locations): +44 (0)330 336 9411
Conference access code: 3277581
Contacts
The Watches of Switzerland Group
Anders Romberg, CFO +44 (0) 116 2817 401
Allegra Perry, Investor Relations
+44 (0) 20 7317 4600
Caroline Browne, Group Finance Director +44 (0) 116 2817 420
investor.relations@thewosgroup.com
Headland
Lucy Legh / Rob Walker +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 both the UK and US, comprising four
prestigious brands; Watches of Switzerland (UK and US), Mappin
& Webb (UK), Goldsmiths (UK) and Mayors (US), with
complementary jewellery offering.
As at 31 October 2021, the Watches of Switzerland Group has 158
stores across the UK and US including 46 dedicated mono-brand
stores in these two markets in partnership with Rolex, TAG Heuer,
OMEGA, Breitling, Audemars Piguet, Tudor and FOPE) and has a
leading presence in Heathrow Airport with representation in
Terminals 2, 3, 4 and 5 as well as six transactional websites.
The Watches of Switzerland Group is proud to be the UK's largest
retailer for Rolex, Cartier, OMEGA, TAG Heuer and Breitling
watches.
Mappin & Webb holds Royal warrants as goldsmiths,
silversmiths and jeweller to Her Majesty The Queen and silversmiths
to His Royal Highness The Prince of Wales. The Mappin & Webb
master jeweller has been Crown Jeweller, custodian of the Crown
Jewels of Her Majesty The Queen since 2012.
https://www.thewosgroupplc.com
Disclaimer
This trading statement does not constitute an invitation to
underwrite, subscribe for, or otherwise acquire or dispose of any
Watches of Switzerland Group PLC shares or other securities nor
should it form the basis of or be relied on in connection with any
contract or commitment whatsoever. It does not constitute a
recommendation regarding any securities. Past performance,
including the price at which the Company's securities have been
bought or sold in the past, is no guide to future performance and
persons needing advice should consult an independent financial
adviser.
Certain statements in this trading statement constitute
forward-looking statements. Any statement in this document that is
not a statement of historical fact including, without limitation,
those regarding the Company's future plans and expectations,
operations, financial performance, financial condition and business
is a forward-looking statement. Such forward-looking statements are
subject to risks and uncertainties that may cause actual results to
differ materially. These risks and uncertainties include, among
other factors, changing economic, financial, business or other
market conditions. These and other factors could adversely affect
the outcome and financial effects of the plans and events described
in this statement. As a result you are cautioned not to place
reliance on such forward-looking statements. Nothing in this
statement should be construed as a profit forecast.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain. The person responsible for making this
announcement is Anders Romberg, Chief Financial Officer.
[1] Net cash/(net debt) is total borrowings (excluding
capitalised transaction costs) less cash and cash equivalents.
Excludes lease liabilities under IFRS 16.
[2] Unaudited adjusted EBITDA is EBITDA before exceptional items shown on a pre-IFRS 16 basis.
[3] Two stores completed at the end of Q2 FY22 with minimal
impact to the Group's H1 FY22 performance; the remaining three
stores are expected to complete before the end of Q3 FY22.
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END
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