Watches of Switzerland Group (WOSG) has unveiled its growth strategy, outlining plans to solidify its position as a dominant player in the luxury watch market in the UK, become the market leader in the US, and establish a presence in the EU market. The company estimates that the combined retail market opportunity for luxury watches in these regions is around $21 billion.
In the US, WOSG sees significant growth potential due to the fragmented and under-invested nature of the luxury watch market. The company projects that its American revenue will experience a compound annual growth rate (CAGR) ranging between 25% and 30% from FY21 to FY26. To capitalize on this opportunity, WOSG intends to open new stores in American Dream, New Jersey, and Kenwood Towne Centre, Cincinnati. It also plans to make strategic acquisitions and expand its e-commerce operations.
Likewise, WOSG identifies untapped potential in the EU market and intends to make strategic moves to capitalize on it. The company plans to acquire new businesses, establish monobrand boutiques, expand in the travel retail sector, and enhance its e-commerce capabilities to unlock growth in the EU market. WOSG anticipates that the EU will contribute between 5% and 8% of its group revenue by FY26.
As WOSG expands in the US and EU, its share of revenue derived from the UK will decrease. Currently, the UK accounts for 67% of the company’s total revenue. By the end of the strategic plan period, the UK’s contribution is projected to be between 44% and 48%, while the US’s share is expected to rise to between 47% and 48%.
Despite the shift in revenue distribution, the UK market remains crucial for WOSG due to its high per capita retail spend on luxury watches. The company aims to outperform the market in the UK by approximately 2% annually and plans to continue investing in its stores, technology, marketing, and customer experience to maintain its leading position.
To support its ambitious growth plans, WOSG estimates a cumulative capital expenditure of £300 million to £340 million during the strategy period. Additionally, it expects potential acquisition expenses of £150 million to £200 million in the US and the EU. While luxury watches will continue to drive 90% of its total turnover by the end of the period, WOSG also foresees growth opportunities in the complementary luxury jewelry and after-sales servicing segments.
Brian Duffy, CEO of WOSG, expressed confidence in the company’s strategy, emphasizing its track record of strong and profitable growth. Despite the UK luxury watch market still expanding, WOSG aims to diversify geographically and establish a leadership position in the US market.
WOSG’s market position was evident in its financial performance, with its statutory profit before tax surging from £1.5 million to £63.7 million in the 53-week period ending May 2. Revenues also increased by 13.3% (constant currency) to £905 million, while adjusted EBITDA saw a significant surge of 34.9% to £105.4 million.
For more information about the Watches of Switzerland Group’s growth strategy and financial results, please visit the following links:
1. Watches of Switzerland Group Growth Strategy Article
2. Watches of Switzerland Group Financial Results Article
