- ‘Unique’ supply/demand dynamics in luxury watch sector

- US expansion bearing fruit, Europe next in line

- Sales this year seen rising up to 20%

Despite the self-evident cost of living crisis affecting the UK, luxury watch seller Watches of Switzerland (WOSG) posted record sales and earnings for the year to the start of May and said it had seen ‘a good start’ to the new financial year.

Chief executive Brian Duffy called it ‘a tremendous year for the group’, particularly against such strong prior-year comparatives.


Group sales for the year to 1 May were up 40% to £1.24 billion with growth in the US – which makes up roughly a third of revenues – outstripping the UK as the firm rolled out its showroom network.

While US sales rose 48% to £428 million, UK sales climbed 36% to £810 million thanks to a combination of more showrooms, including the introduction of the Goldsmiths Luxury concept, and its online push supported by digital marketing.

Luxury watch sales were up 36%, with demand in both markets ‘consistently’ exceeding supply, while luxury jewellery sales soared 86% thanks to an improved range, the acquisition of Betteridge and a new mono-brand boutique with Italian fashion house Bulgari.

EBITDA (earnings before interest, taxes, depreciation and amortization) grew by 54% to £162 million, with the margin of sales increasing by 1.5% to 13.1% due to higher average selling prices, a better product mix and operational leverage.

The next obvious target market for the Leicester-based firm is Europe, and the expansion is already under way with a mono-brand boutique with Breitling opened in Sweden last month and five more mono-brand boutiques set to open this financial year.


The company said it had started the new year well with ‘strong momentum’ and waitlists growing as demand continues to exceed supply.

It also flagged the recovery of footfall and traffic at airports as a positive sign for sales growth this year.

As a result, it reiterated its forward guidance for sales of between £1.45 billion and £1.5 billion, an increase of 17% to 21%, and an EBITDA margin of between 13.1% and 13.6%, implying between £193 million and £200 million using the mid-point of the forecast revenue range.

Having fallen almost 50% this year, the shares initially jumped 10% to 869p but gradually fell back to flat at 790p as the morning session drew on.

Analysts at Shore Capital described the current valuation of 16 times last year’s earnings and 13.4 times prospective earnings as ‘undemanding given the potential growth trajectory in the fragmented US and EU markets’.


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Issue Date: 07 Jul 2022