Watches of Switzerland returns to growth

Watches of Switzerland has reported that full-year revenue rose by 5.9% to £819.3m in the period ended 26 April, 2020. Before lockdown, the group reported “strong” trading during the 46 weeks to 15 March, with group revenue soaring by 15.8%. Revenue was up by 9.4% across UK operations, and its overall performance was driven by luxury watches, with sales up by 19.3% in the period. In the final six weeks of the year, however, sales were impacted by lockdowns across its UK and US estate, with group revenue down by 84.9% in the six weeks ended 26 April 2020. Nonetheless, EBITDA rose by 13.6% to £78.1m in its full-year results, while operating profit increased by 6.2% to £48.3m. In its latest trading update, the watch retailer also reported its results for its first quarter of 2021. In the period ended 26 July, group revenue was ahead of expectations, though sales were still down by 27.6% to £151.6m in light of store closures. Following lockdown, however, the group has since returned to growth. A “strong” performance in July saw revenue up by 7.4% against the year prior, despite the fact that year-on-year sales were down by 83% in May. Since reopening, the group also noted that low traffic has been offset by higher conversion rates, a good supply of key brands and new technology to enhance clienteling initiatives. In addition, the first quarter saw continued strong e-commerce performance, with sales up by 79.3%. Performance was also boosted by luxury watch sales, which increased to 86.8% of group revenue in the period. In its UK market, “strong” domestic sales rose by 20.4%, offsetting lower tourism and airport business, which crashed by 92.8% in the period. Looking ahead, the group expects domestic demand to remain “buoyant”, but anticipates “limited but improving” airport traffic and foreign tourism in the UK, and limited domestic tourism in the US, with “gradual and moderate” improvement throughout the financial year. CEO Brian Duffy said: “While we began FY21 with our global store portfolio closed due to the pandemic, we were well prepared for the reopening of our stores during Q1 and trading has exceeded our expectations in both the UK and the US. “This continued strong performance is testament to our long-standing brand partnerships, focus on exceptional customer experience, well-established multi-channel leadership and the strong fundamentals of the luxury watch category in our markets, where demand continues to exceed supply.” He added: “Looking ahead, we will continue to invest in delivering on our strategic priorities to leverage our leading position in the UK and to become a leader in the US luxury watch market. We are confident that we are well positioned to emerge even stronger from these uncertain and challenging times.”