Watches of Switzerland powers ahead as luxe watch, jewellery sales boom

Watches of Switzerland has continued its undeniably impressive performance and on Wednesday said that it saw a "stellar end" to FY22 with strong momentum going into the new financial year.

The fast-growing luxury watches and jewellery group released a trading update for Q4 and the full year with details of its performance up to 1 May, and it showed how buoyant the luxury watches and jewellery market remains.

Revenue growth of 40% for the full year came with improved profitability and in the final quarter, revenue was up as much as 48%.

As well as its eponymous chains, the group also owns Mappin & Webb and Goldsmiths in the UK, Mayors and Betteridge in the US and operates a number of monobrand boutiques.

CEO Brian Duffy called it “an outstanding year for the group” and said it delivered “another record year of revenue and profitability as we continue to progress our Long Range Plan”.

The performance was also “outstanding” in both the US and UK, “supported by broad-based sales growth across our portfolio of world leading partner brands and driven by domestic clientele”.

And he's upbeat about the potential offered by the company's recent debut in the European market.

He said that overall, the luxury watch and jewellery markets “are dynamic and our group investment-led model continues to gain positive momentum”.

Consumer desire for ‘Super High Demand’ brands like Rolex, Patek Philippe and Audemars Piguet “continues to exceed supply and other luxury watch brands are enjoying exceptionally strong demand and sales. Luxury jewellery demand is also very positive”, we’re told.

So what exactly happened in Q4? Group revenue rose to £304 million from £218 million a year earlier, with US revenue up 50% to £136 million. It opened a flagship Watches of Switzerland branch in Kenwood Towne Center, Cincinnati, Ohio during the period.

UK revenue rose 47% to £168 million and it opened three monobrand boutiques in key locations —  Breitling Bullring, TAG Solihull and Omega Meadowhall.

For the year, group revenue rose 40%, as mentioned, to £1.238 billion with US revenue up 48% to £428 million and UK revenue up 36% to £810 million.

FY22 luxury watch sales rose 36% on the year and luxury jewellery sales were up a massive 86%, “reflecting a strong market, continued improvement in ranging, incremental growth from the Betteridge acquisition and the opening of our first Bulgari monobrand boutique”.

Importantly too, group e-commerce sales for FY22 were up 5% on last year, even though the prior year had seen an e-tail boost due to stores being closed. And they were up 128% vs FY20.

The company said sales continued to be driven by a domestic clientele, making up 97% of group revenue.

It now expects FY22 adjusted pre-IFRS 16 EBITDA of between £160 million and £164 million, up from £105 million in FY21. 

And it said it enters FY23 “with strong momentum and anticipates that disruption from the pandemic is now largely behind us with ongoing recovery in footfall and airport traffic”.

Based on current visibility of supply of key brands and confirmed showroom refurbishments, openings and closures, it expects FY23 revenue between £1.45 billion and £1.5 billion. Adjusted EBITDA on a percentage basis should be between flat and 0.5% higher. And profit on an EBIT basis should be between £157 million and £169 million.