Watches of Switzerland reveals a 4% increase in revenue amidst a challenging fiscal environment.
- Despite US market growth, overall profits have dipped due to acquisition and integration costs.
- Luxury jewellery sales shine, boosted by strategic acquisitions, but watch sales experience a decline.
- The company anticipates a robust second half with strategic expansions and showroom openings.
- Watches of Switzerland remains confident in meeting its full-year forecasts despite current hurdles.
Watches of Switzerland reported a 4% increase in group revenue, reaching £785 million in the first half of its financial year. This rise was primarily driven by a surge in demand in the United States, which saw a remarkable 24% increase during the second quarter.
Despite this positive trend in revenue, the company’s adjusted earnings before interest and tax (EBIT) fell by 9%, landing at £66 million. This decline is attributed to costs associated with acquisitions and integration processes. Furthermore, the statutory profit before tax saw a 39% decrease, reaching £41 million.
While the US market showed strong performance, the UK and European markets experienced a slight contraction of 1%, totalling revenues of £430 million. Nevertheless, the company expressed satisfaction with the trading improvements seen in the second quarter.
In the luxury segment, jewellery sales displayed an impressive growth of 104% in constant currency, significantly influenced by the acquisition of Roberto Coin, which added £51 million to the group’s revenue. Excluding this acquisition, jewellery sales saw a 6% decline, although the UK market began showing signs of recovery.
The pre-owned watch sector performed well, with Rolex Certified Pre-Owned now becoming the second-largest luxury watch brand within the company. Nevertheless, overall luxury watch sales fell by 2%, affected by increased stock levels in the first quarter.
The retailer remains optimistic about its future, bolstered by ongoing showroom expansions in major cities including London, Manchester, Texas, and Florida. The acquisition of Hodinkee, a platform for luxury watch enthusiasts, is expected to enhance the group’s online presence.
Looking forward, Watches of Switzerland is optimistic about the holiday trading period and maintains its full-year revenue forecast between £1.67 billion and £1.73 billion, projecting growth rates between 9% and 12% at constant currency.
Watches of Switzerland is navigating challenges with strategic growth initiatives while maintaining a positive outlook for the fiscal year ahead.
