REG - Watches of Switzlnd. - Q3 FY24 Trading Update

Watches of SwitzerlandAnnouncement

08/02/2024 07:15

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240208:nRSH4044Ca&default-theme=true

RNS Number : 4044C  Watches of Switzerland Group PLC  08 February 2024

8 February 2024

 

Watches of Switzerland Group PLC

Q3 FY24 Trading Update

for the 13 weeks (Q3 FY24) and 39 weeks (9M FY24) to 28 January 2024

 

Guidance reconfirmed from 18 January 2024 Trading Update

 

Financial Highlights:

 

Q3 FY24 Group revenue £397 million (Q3 FY23: £407 million), -1% at constant
currency, -3% at reported rates

9M FY24 Group revenue £1,158 million (9M FY23: £1,172 million), +1% at
constant currency, -1% at reported rates

·     As outlined in the 18 January 2024 Trading Update, trading in the
run-up to and beyond Christmas was tougher than originally expected,
particularly in the UK amidst slower demand for luxury discretionary purchases

·     Demand for our key brands, particularly products on the
Registration of Interest lists, continues to be strong, with consistent
additions and conversions

·     Q3 FY24 luxury watches +1% at constant currency to £336 million,
representing 85% revenue (Q3 FY23: 84%)

·     Q3 FY24 luxury jewellery -16% at constant currency to £34
million, growth in luxury branded jewellery offset by weaker performance in
non-branded jewellery

·     Group ecommerce revenue -15% on last year at reported rates.
Impacted by the mix of products through this channel and performance of the UK
market

·     Continued positive momentum within pre-owned and now in 14
agencies for Rolex Certified Pre-Owned in the US and 10 in the UK

·     Addition/expansion of prestigious luxury jewellery brands within
the portfolio

 

Performance by Geography:

 

US revenue of £175 million (Q3 FY23: £169 million), +8% at constant
currency, +3% at reported rates vs prior year

9M FY24 US revenue £502 million (9M FY23: £480 million), +10% at constant
currency, +5% at reported rates

·      US sales remained strong across all regions

·      Sustained growth reflecting the success of our model and strength
of client demand

·      Gaining market share in the fragmented US luxury watch market

·      Relocation of Rolex boutique Millenia, Orlando to a larger
showroom, opened November 2023

·      Partnership with American Express Centurion Club launched

 

UK & Europe revenue of £222 million (Q3 FY23: £238 million), -7% vs
prior year

9M FY24 UK & Europe revenue £656 million (9M FY23: £692 million), -5% vs
prior year

·     Challenging macroeconomic conditions in the UK impacted consumer
spending in the luxury retail sector, impacting luxury watches and
particularly non-branded jewellery where we saw unusually high levels of
promotional activity

·     Consumers allocating discretionary spend to other categories such
as fashion, beauty, hospitality and travel over this period

·     We continued to gain share in the luxury watch market due to our
differentiated offering

·     UK performance continues to be driven by domestic clientele with
minimal return of tourist spending due to the lack of VAT free shopping

·     Rebranding, colleague training and systems conversions completed
for the fifteen showrooms acquired from Ernest Jones on schedule

·     Showroom development programme continues with several projects
completed in the period:

o  Continued roll-out of Goldsmiths Luxury showroom format, including the
expansion of the Birmingham Bullring and Metrocentre Newcastle showrooms, and
the relocation of Trafford Centre Manchester showroom, all in December 2023

o  Further roll-out of the Mappin & Webb contemporary format with
refurbishments in Glasgow and Bluewater

 

 

Outlook

·    Guidance reconfirmed from our 18 January 2024 Trading Update

·    Guidance reflects current visibility of supply from key brands and
confirmed showroom refurbishments, opening and closures, and excludes
uncommitted capital projects and acquisitions

·    Trading conditions experienced in Q3 FY24 in the UK and US are
expected to continue over the remainder of the fiscal year

·      Guidance includes the new Watches of Switzerland multi-brand
showroom at One Vanderbilt, New York due to open in March 2024

·      We are encouraged by the UK Office for Budget Responsibility's
review of VAT free shopping for tourists; we have not included its
reintroduction into our guidance

 

 

·      FY24 guidance (on an organic pre-IFRS 16 basis):

 

 o  Revenue:                          £1.53 - £1.55 billion, growth of 2-3% at constant currency
 o  Adjusted EBIT margin %:           8.7% - 8.9%
 o  Total finance costs:              c.£6 million
 o  Underlying tax rate:              c28%
 o  Capex:                            £70 - 80 million
 o  Operating cash flow conversion:   c.50%

The equivalent guidance on an IFRS 16 basis:

 o  Adjusted EBIT margin %:      9.7% - 9.9%
 o  Total finance costs:         £26 - £30 million

·      The Group is exposed to movements in the £/$ exchange rate when
translating the results of its US operations into Sterling. The actual average
exchange rate for FY23 was 1.20

 

Q3 FY24 Revenue performance by geography
 
                  Q3 FY24       Q3 FY23       Q3 FY24 vs Q3 FY23
                  13 weeks to   13 weeks to   Reported

                  28 Jan 2024   29 Jan 2023   YoY %       Constant currency

 (£million)                                               YoY %

 UK & Europe      222           238           -7%         -7%
 US               175           169           3%          8%
 Group Revenue    397           407           -3%         -1%

 

9M FY24 Revenue performance by geography

 
                   9M FY24       9M FY23       9M FY24 vs 9M FY23
                   39 weeks to   39 weeks to   Reported    Constant currency

                   28 Jan 2024   29 Jan 2023   YoY %       YoY %

 (£million)
                   656           692

 UK & Europe                                   -5%         -5%
 US                502           480           5%          10%
 Group Revenue     1,158         1,172         -1%         1%

 

Q3 FY24 Revenue performance by category
 
                   Q3 FY24       Q3 FY23       Q3 FY24 v Q3 FY23
                   13 weeks to   13 weeks to   Reported

                   28 Jan 2024   29 Jan 2023   YoY %      Constant currency

 (£million)                                               YoY%
 Luxury watches    336           340           -1%

                                                          1%
 Luxury jewellery  34            41            -18%       -16%
 Services/other    27            26            4%         5%
 Group Revenue     397           407           -3%

                                                          -1%

 
9M FY24 Revenue performance by category
 
                   9M FY24       9M FY23       9M FY24 v 9M FY23
                   39 weeks to   39 weeks to   Reported

                   28 Jan 2024   29 Jan 2023   YoY %      Constant currency

 (£million)                                               YoY%
 Luxury watches    1,006         1,007         0%

                                                          2%
 Luxury jewellery  81            97            -17%       -15%
 Services/other    71            68            5%         6%
 Group Revenue     1,158         1,172         -1%

                                                          1%

 

The financial information contained herein is unaudited.

Ecommerce revenue are sales which are transacted online.

Certain financial data within this announcement has been rounded. Growth rates
are calculated on unrounded numbers.

 

 

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 (mailto:investor.relations@thewosgroup.com)

 

Headland

Lucy Legh / Rob Walker / Joanna
Clark
                              +44 (0) 20 3805 4822

wos@headlandconsultancy.com (mailto: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 28 January 2024, the Watches of Switzerland Group had 222 showrooms
across the UK, US and Europe including 98 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 (http://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 risks relating to future events, other risks, uncertainties
and 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 implied by the forward-looking statements.
Undue reliance should not be placed on any forward-looking statements and,
except as required by law or regulation, the Company undertakes no obligation
to update these forward-looking statements.  No statement in this
announcement should be construed as a profit forecast or profit estimate.

 

Before making any investment decision in relation to the Company you should
specifically consider the factors identified in this document, in addition to
the risk factors that may affect the Company or the Group's operations as
detailed above.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTQKOBNFBKDFBK