REG - Watches of Switzlnd. - Q2 FY22 Trading Update

Watches of SwitzerlandAnnouncement

09/11/2021 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20211109:nRSI7204Ra&default-theme=true

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 £586.2 million (H1 FY21: £414.3 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 £418.6 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 £167.6 million, +50.2% vs
H1 FY21 and +66.7% vs H1 FY20 (both in constant currency)

·      Net cash 1  (#_ftn1) of £30.0 million as at 31 October 2021 (net
debt as at 25 October 2020: £(22.7) million)

·    Following a strong sales performance with a margin-accretive product
mix and further operating leverage, H1 FY22  Adjusted EBITDA 2  (#_ftn2) is
expected to be £81.0 million to £83.0 million (H1 FY21: £52.2 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  (#_ftn3)

·     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 £288.7 million (Q2 FY21: £262.7 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 £196.9 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 £91.8
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: £1.15 billion to £1.20 billion (previous guidance £1.05
billion to £1.10 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: £30.0 million to £32.0 million (no change vs previous
guidance)

o  Total finance costs: £4.0 million to £4.5 million (no change vs previous
guidance)

o  Underlying tax rate: 21.0% to 22.5% (no change vs previous guidance)

o  Capex: £45.0 million to £50.0 million (previously £40.0 million to
£45.0 million)

o  Net debt: £10.0 million to £20.0 million (previously £20.0 million to
£30.0 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 FY21                        H1 FY22 vs H1 FY20
                26 weeks to   26 weeks to   Reported YoY %                            2-year Reported YoY %

                31 Oct 2021   25 Oct 2020                   Constant currency YoY %                          2-year constant currency YoY %

 (£m)

 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 FY21                        Q2 FY22 vs Q2 FY20
                13 weeks to   13 weeks to   Reported YoY %                            2-year Reported YoY %  2-year constant currency YoY %

                31 Oct 2021   25 Oct 2020                   Constant currency YoY %

 (£m)

 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 to   13 weeks to   Reported YoY %  26 weeks to   26 weeks to   Reported YoY %

                   31 Oct 2021   25 Oct 2020                   31 Oct 2021   25 Oct 2020

 (£m)
 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 (mailto:investor.relations@thewosgroup.com)
 

 

Headland

Lucy Legh / Rob
Walker
              +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 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 (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  (#_ftnref1)  Net cash/(net debt) is total borrowings (excluding
capitalised transaction costs) less cash and cash equivalents.  Excludes
lease liabilities under IFRS 16.

 2  (#_ftnref2)  Unaudited adjusted EBITDA is EBITDA before exceptional items
shown on a pre-IFRS 16 basis.

 3  (#_ftnref3) 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.

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  TSTFSIFAAEFSELF