Watches of Switzerland results tick to record highs, expect more for FY24

Not only has it been another record year of revenue and profitability for Watches of Switzerland (WoS) but the luxury watches and jewellery retailer is confidently predicting more of the same in FY24.

It said the new financial year is already “significantly ahead of Long Range Plan”. And don’t rule out more brand acquisitions.

For now, that record FY23 translates to group revenue of £1.543 billion, up 25% at reported rates, and by 19% at constant currency on the prior year.

Luxury watch sales grew 28% year-on-year, representing 87% of group revenue, driven by a combination of increased average selling price (ASP) as well as volume growth.

Luxury jewellery sales also grew 10% driven by an increase in ASP with a focus on full-price sell-through.

Adjusted EBIT was also 27% higher at £165 million while the adjusted EBIT margin inched up 20bps to 10.7% from 10.5% a year ago. Back then, margins benefited from £5 million of UK business rates relief, but at the time and this time round, the rise was mainly driven by sales. Statutory operating profit also lifted 26% to £179 million.

And as WoS and its owned retail brands, including Goldsmiths, continues to grow physically, it said there has been “excellent progress” with both its showroom expansion and refurbishment programme. The group spent £68 million on 27 new showrooms alongside refurbishing 13 units in the year.

GOOD MOMENTUM

Behind those impressive numbers was continued strong momentum across the UK, Europe and US markets.

There were particularly strong gains in its UK and Europe performance, driven by domestic clientele, with revenue up 10% year-on-year to £890 million. Notably, there was an improved performance in airport business as traffic recovered, WoS noted.

It made significant investments in 15 new UK showroom openings including four monobrand boutiques and a WoS multibrand showroom at the new Battersea Power Station mall in London.

This growth was backed by the continued rollout of Goldsmiths Luxury concept with nine showrooms refurbished in FY23 and significant enhancements to two WoS multibrand showrooms.

That meant FY23 ended with 89 multibrand showrooms and 51 monobrand boutiques.

US STRENGTH

Meanwhile, the fast-expanding US business delivered “exceptional growth”, with sales of £653 million, up 52% at reported rates against the prior year and by 35% at constant currency. That means US ops now represent 42% of group revenue.

And as already mentioned, the WoS outlook for FY24 remains unchanged from Q4 trading update on 17 May.

“Guidance reflects current visibility of supply from key brands and confirmed showroom refurbishments, openings and closures, and excludes uncommitted capital projects and acquisitions”, it said.

And CEO Brian Duffy added: “Luxury watch demand remains strong and continues to outpace supply, with our client registration lists extending and average selling prices growing.

“We start the new financial year with some great projects [including] the first opening of our new Mappin & Webb contemporary showroom design, and five monobrand boutiques in the UK and Europe, including our first showroom in Germany.” 

He also added: “We continue to actively pursue additional inorganic growth opportunities to enhance that growth.”