Watches of Switzerland Group has recently released its strong financial results for the fourth quarter and the end of the year, positioning the company ahead of its long-term plan as it enters the 2024 financial year. The luxury watches and jewellery retailer experienced robust growth in FY23, with a revenue increase of 25% at reported rates (19% at constant currency) and continued expansion of the EBIT margin. Despite facing a more challenging trading environment in the second half of the year, Watches of Switzerland saw a persistent demand that surpassed supply, leading to strong revenue growth and an increase in client registration lists.
In the fourth quarter, the group’s revenue reached an impressive £371 million, reflecting a 22% increase at reported rates and an 18% increase at constant currency. The US market showcased remarkable performance, with reported growth of £173 million (27%) and 17% growth at constant currency. The UK and Europe markets also experienced substantial growth, generating £198 million in revenue, an 18% increase, primarily due to the strategic timing of supply-constrained product deliveries. The company continued its showroom development program in the UK, expanding and refurbishing two Goldsmiths luxury showrooms and opening two monobrand boutiques in partnership with Breitling. In Europe, Watches of Switzerland opened a sixth monobrand boutique featuring TAG Heuer in Dublin, and early trading in these locations has met expectations.
For the full year, the group’s revenue reached an impressive £1.543 billion, reflecting a 25% increase as mentioned earlier. The US market surpassed expectations with a remarkable 52% jump, generating £653 million in revenue (or 35% growth at constant currency). The UK and Europe markets also saw solid growth, with revenue increasing by 10% to reach £890 million. The luxury watch segment experienced a significant 28% increase, driven by higher average selling prices and volume. Luxury jewellery revenue also rose by 10%. While group e-commerce revenue saw a slight increase of 3% at reported rates, pre-owned revenue saw substantial double-digit growth while maintaining pricing and margins.
Watches of Switzerland expects its adjusted pre-IFRS 16 EBIT for the year to be between £163 million and £167 million, showcasing a significant improvement from the previous year’s £130 million, despite various challenges faced. Adjusted EBIT post-IFRS 16 is projected to be between £177 million and £181 million, up from £144 million. The company also announced an expansion of its partnership with Audemars Piguet by signing a letter of intent to open an AP House in St Anne’s, Manchester, in spring next year, as part of a joint venture partnership. This expansion marks over 50 years of collaboration with Audemars Piguet. Additionally, a flagship Tudor monobrand boutique is set to open on Old Bond Street in the fourth quarter of FY24.
Looking ahead, Watches of Switzerland foresees a more challenging trading environment in the first half of FY24 compared to the strong performance in the second half of FY23. A modest sales decline is expected in Q1 FY24 before normalizing in Q2. Despite these anticipated headwinds, the company remains optimistic and confident in its ability to successfully navigate the market.
Useful links:
– Watches of Switzerland Upgrades FY23 Outlook on Strong Sales
– Why the Luxury Watch Industry Should Fear Watches of Switzerland
