TIDMWOSG
RNS Number : 5596S
Watches of Switzerland Group PLC
07 November 2023
7 November 2023
Watches of Switzerland Group PLC
Long Range Plan
World's largest luxury watch retailer outlines strategic growth
plan from FY24 to FY28
Plan to more than double sales and profits by FY28
Multiple significant organic and inorganic growth opportunities
across UK, US and Europe
Brian Duffy, Chief Executive Officer, said:
"I am excited to present our Long Range Plan to FY28. It
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.
"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. Our longstanding brand partnerships, leading multichannel
capabilities, sophisticated marketing, and exceptional client
service elevating the luxury experience truly sets us apart.
"Today's Long Range Plan demonstrates our confidence in more
than doubling our sales and profits from FY23 to FY28, aiming to
surpass the milestone of GBP3bn in revenue whilst driving
operational leverage and accelerating new showroom projects and
M&A activity.
"We are excited by the opportunity available to us in the
Pre-Owned market, particularly from the new Rolex Certified
Pre-Owned programme, which we expect to deliver 20% of new Rolex in
the US and 10% in the UK by FY28. Analog:Shift/Non-Rolex Certified
Pre-Owned is expected to deliver sales CAGR of more than 35% and
25% in the US and UK respectively.
"We also see significant growth potential in the luxury branded
jewellery market and we are now perfectly positioned to apply our
market leading luxury watch model and expertise in elevating luxury
brands to this growing category, which we expect to comprise a
substantially larger share of our total revenue as we expand our
offer and leverage partnerships with US megabrands.
"We are very proud of what we have achieved in the last three
years and have set ambitious though attainable goals for the Long
Range Plan. The plans are built on a number of specific growth
opportunities, and we are confident in our ability to deliver these
objectives."
Proven track record of delivery
-- Long-term track record of sustainable profitable growth from FY15 to FY23:
- Revenue CAGR +19.3%
- Adjusted EBIT CAGR +43.6%
- Return On Capital Employed (ROCE) of 27.9%, FY15 to FY23 increasing by +21.2%
-- Unique WOSG model proven to work in all our chosen markets
- Firmly established leadership position as leading retailer of luxury watches in the UK
- On track towards building leadership position in US market
since entry in 2017; revenue CAGR of +40% from FY20 to FY23, making
up 42% of the Group revenue in FY23
- Positive start to growing presence in European market since
entry in 2022; nine mono-brand boutiques across four countries
-- Performance significantly ahead of original Long Range Plan announced in July 2021
- FY24 sales cGBP200m ahead of the original Long Range Plan on a
straight-line basis (at mid-point of guidance). Reflects CAGR
growth of +23% vs +18% in the original Long Range Plan
- Adjusted EBIT CAGR +32% vs +25% in the original Plan
Long Range Plan highlights
-- Long term targets
-- Group sales to more than double from FY23 base, surpassing
GBP3bn milestone by the end of FY28
- UK and US growth ahead of market
- US revenue CAGR growth 20-25%
- UK revenue CAGR growth 8-10%
- Europe to be 4-6% of Group sales in FY28
-- More than doubling Adjusted EBIT from FY23 base by end of
FY28, +50 to 150bps margin improvement by the end of the Plan
- UK and US growth plans to be key drivers
- A sustained growth in average selling price (ASP)
- UK and US showroom productivity improvements
- Mix benefits as US becomes the largest portion of the Group
- European productivity and profitability improvements
-- Expanding into new growth opportunities
-- Pre-Owned
- Global Pre-Owned watch market growing and stronger in western
markets and online, representing a major growth opportunity for the
Group in UK and US
- Rolex Certified Pre-Owned provides additional growth platform.
To deliver 20% of new Rolex in the US and 10% in the UK by FY28
- Following US success, planned launch of Analog:Shift in UK
- Analog:Shift/Non-Rolex Certified Pre-Owned expected to deliver
sales CAGR of more than 35% and 25% in US and UK respectively over
the life of the Plan
-- Luxury branded jewellery
- Luxury branded jewellery category is dynamic with long-term
double-digit growth. Our Group is currently underdeveloped in this
exciting category
- Significant opportunity to leverage WOSG's proven model in
elevating luxury brands to expand offer and leverage partnerships
with luxury jewellery brands
- Opening dedicated Mappin & Webb luxury branded jewellery
showroom in FY25 in Manchester which includes De Beers' first
boutique outside of London
-- Leveraging existing growth opportunities
-- The Group will continue to drive growth from existing opportunities, including:
- Showroom upgrades across the Goldsmiths, Mappin & Webb,
Watches of Switzerland, Mayors and Betteridge estates
- Mono-brand boutique productivity enhancements
- Ecommerce development and investment in the US and launch in Europe
-- The Group will capitalise on exciting existing and new market-specific activity, including:
- US: targeted acquisitions and new showroom projects including
new Rolex boutique Plano, Texas and One Vanderbilt, New York, and
targeted acquisitions
- UK: new showroom projects including Rolex Old Bond Street
boutique and Audemars Piguet Townhouse, and acquisition of 19
luxury watch showrooms from Ernest Jones
- Europe: new showroom projects and targeted acquisitions; first
Watches of Switzerland multibrand in the region, marking the
Group's entry into the Netherlands; launch of ecommerce
- Indicative range of GBP350m to GBP500m capital investment by
end of FY28 to support new project and acquisition plans
-- Consistent, sustained capex to support growth plans, with strong ROCE
- Indicative range of cumulative capex spend from GBP300m to GBP350m by end of FY28
- Good Return on Capital Employed driven by expanded EBITDA
- Showroom upgrade program completed during the life of the Plan
which will reduce capital intensity in later years of the Plan
- Working capital investment in jewellery and Certified
Pre-Owned to drive sales and market share
-- Cash generation and capital allocation
- Strong free cash flow generation to fund organic and inorganic
growth from existing facilities; free cash flow conversion
65-70%
- Investment in working capital to support sales growth
- Priority for capital allocation remains funding business
growth through investment in showroom elevation, new projects and
acquisitions
- Decisions about allocation of surplus to be taken at the appropriate time
Notes
Adjusted EBIT is EBIT before exceptional items shown on a
pre-IFRS 16 basis
Return on Capital Employed is defined as Adjusted EBIT divided
by the average capital employed, calculated on a Last Twelve Month
(LTM) basis. Average capital employed is total assets less current
liabilities excluding IFRS 16 lease liabilities
Presentation
The CEO, Brian Duffy, and CFO, Anders Romberg, will be joined by
leaders of the business to host a presentation on the Group's Long
Range Plan at 2.00pm (UK time) today, which can be accessed via the
following details:
Webcast link:
https://stream.brrmedia.co.uk/broadcast/6544b9a36eba922222a2e0e7
For any enquiries, please contact
wos@headlandconsultancy.com
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 29 October 2023, the Watches of Switzerland Group had 211
showrooms across the UK, US and Europe including 97 dedicated
mono-brand boutiques in partnership with Rolex, OMEGA, TAG Heuer,
Breitling, TUDOR, Audemars Piguet, Longines, 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, losses 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 announcement.
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
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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
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in this announcement should be construed as a profit forecast or
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