TIDMWOSG
RNS Number : 6413Z
Watches of Switzerland Group PLC
17 May 2023
17 May 2023
Watches of Switzerland Group PLC
Q4 FY23 Trading Update
for the 13 weeks (Q4 FY23) and 52 weeks (FY) to 30 April
2023
Strong FY23 performance in line with guidance
Entering FY24 significantly ahead of Long Range Plan
Brian Duffy, Chief Executive Officer, said:
"FY23 was another record year of revenue and profitability, with
revenue growth of 25% at reported rates (+19% at constant currency)
and continued EBIT margin expansion. Although, as expected, the
second half of FY23 saw a more challenging trading environment,
demand remains strong and continues to exceed supply, with client
registration lists continuing to grow. I would like to thank all my
colleagues for their continued hard work and dedication.
We have an exciting pipeline of showroom projects, and I am
delighted to announce the Group has signed a letter of intent with
Audemars Piguet ("AP") confirming its intention to open an AP House
in the UK in the region of St Anne's, Manchester, via a Joint
Venture partnership in Spring 2024. This is an important expansion
in our partnership with Audemars Piguet which has spanned more than
50 years and we look forward to what will be a great showroom for
the city of Manchester. We also announce today our plan to open a
flagship TUDOR mono-brand boutique at Old Bond Street, one of the
most prestigious addresses in London, in Q4 FY24.
We enter FY24 significantly ahead of where we expected to be in
our Long Range Plan following two years of exceptional performance
and notwithstanding the macroeconomic backdrop. Our FY24 guidance
assumes revenue growth of 8 to 11% at constant currency with EBIT
margin in line with prior year. We remain confident in our goals to
maintain our leadership position in the UK, become the clear leader
in the US, and capitalise on our growth potential in Europe."
FY23 Highlights
-- Group revenue GBP1,543 million, +25% at reported rates, +19%
at constant currency on prior year:
o US revenue GBP653 million, +52% at reported rates, +35% at
constant currency
o UK and Europe revenue GBP890 million, +10%
o Luxury watch revenue +28% driven by increases in average
selling price and volume, demonstrating the continued dynamism of
the category
o Luxury jewellery revenue +10%
o Group ecommerce revenue +3% at reported rates
o Pre-owned revenue grew strong double digits with pricing and
margins maintained
-- Adjusted pre-IFRS 16 EBIT expected to be between GBP163
million and GBP167 million (FY22: GBP130 million), delivering
continued margin expansion, despite headwinds from interest free
credit and product mix
o Adjusted EBIT post-IFRS 16 expected to be between GBP177
million and GBP181 million (FY22: GBP144 million)
-- Operating cash conversion expected to be c.70% with net cash
of GBP16 million as at 30 April 2023 (1 May 2022: net debt GBP14
million), after accounting for GBP21m of acquisitions in the
year
-- Group banking facilities renewed with GBP225 million RCF
available effective 9 May 2023 for the next five years reducing
annual financing costs going forward
Q4 FY23 Highlights
-- Group revenue GBP371 million, +22% at reported rates, +18% at constant currency
o US revenue GBP173 million, +27% at reported rates, +17% at
constant currency
o UK and Europe revenue GBP198 million, +18% benefitting from
timing of deliveries of supply constrained product
-- UK showroom development programme continues with several projects completed in the quarter:
o Continued rollout of the Goldsmiths luxury format with two
showrooms expanded and refurbished in Cabot Circus, Bristol and
Lakeside, West Thurrock
o Two mono-brand boutiques opened in partnership with Breitling
in Leicester and Cribbs Causeway, Bristol
-- We continue our expansion into Europe, opening our sixth
mono-brand boutique, with TAG Heuer in Dublin. Early trading
remains in line with expectations
Outlook
-- The Group has made excellent progress in the first two years
of its Long Range Plan and enters FY24 significantly ahead of
schedule
-- FY24 guidance anticipates that the more challenging trading
environment of the second half of FY23 will continue into the first
half of FY24 before improving in H2
-- Due to product intake timing, which supported Q4 FY23, and
strong prior year comparatives, the Group expects a modest sales
decline in Q1 FY24 before normalising in Q2
-- FY24 guidance reflects current visibility of supply from key brands and confirmed showroom refurbishments, openings and closures, and excludes uncommitted capital projects and acquisitions
-- The Group provides the following FY24 guidance on an organic
pre-IFRS 16 basis, assuming a GBP/$ 1.25 exchange rate:
o Revenue: GBP1.65 - GBP1.70 billion, growth of
8 - 11% at constant currency
o Adjusted EBIT margin In line with FY23
%:
o Total finance costs: c.GBP3 million
o Underlying tax rate: 27% - 28% reflecting the increase in
UK corporation tax
o Capex: GBP70 - 80 million
o Operating cash conversion: c.70% weighted towards H2 in line with
the seasonal pattern
The equivalent guidance on an IFRS 16 basis is:
o Adjusted EBIT margin In line with FY23
%:
o Total finance costs: GBP23 - GBP27 million
-- The Group has an exciting pipeline of new showroom projects planned in FY24:
o Watches of Switzerland multi-brand showroom in American Dream,
New Jersey opening in May 2023
o First Watches of Switzerland multi-brand showroom in Europe in
the Mall of the Netherlands, The Hague opening at the end of the
calendar year
o Watches of Switzerland multi-brand showroom at One Vanderbilt,
New York opening in January 2024
o AP House in Manchester, via a Joint Venture partnership with
Audemars Piguet in Spring 2024
o Old Bond Street Rolex flagship boutique in first half of
2024
o Expansion of the mono-brand portfolio in the UK, US and Europe
including:
-- TAG Heuer mono-brand boutique in Kurfurstendamm, Berlin,
Germany
-- TAG Heuer mono-brand boutique in Mall of Scandinavia,
Stockholm, Sweden
o Continued refurbishment and expansion of showroom network
including:
-- Refurbishment and expansion of Mayors Dadeland, Florida
opened in May 2023
-- Continued roll out of Goldsmiths luxury showroom format
-- Launch of new luxury showroom concept for Mappin &
Webb
-- The Group is exposed to movements in the GBP/$ exchange rate
when translating the results of its US operations into Sterling.
The Actual average exchange rate for FY23 was 1.20. FY24 guidance
assumes a GBP/$ 1.25 exchange rate, with a five cent move resulting
in an adjustment of c.GBP25 million to full year Group revenue and
c.GBP3 million on full year Adjusted EBIT, on a pre-IFRS 16
basis
-- The Group plans to announce FY23 results on 13 July 2023
Q4 FY23 Revenue performance by geography
Q4 FY23 Q4 FY22 Q4 FY23 vs Q4 FY23 vs Q4
Q4 FY22 FY21*
-----------------
13 weeks 13 weeks Constant 2-year
to to currency 2-year Constant
(GBP million) 30 April 1 May Reported YoY % Reported currency
2023 2022 YoY % YoY % YoY %
---------- --------- --------- ---------- ---------- ----------
UK and Europe 198 168 18% 18% 57% 57%
---------- --------- --------- ---------- ---------- ----------
US 173 136 27% 17% 87% 66%
---------- --------- --------- ---------- ---------- ----------
Group Revenue 371 304 22% 18% 70% 60%
---------- --------- --------- ---------- ---------- ----------
*FY21 includes a 53(rd) week
FY23 Revenue performance by geography
FY23 FY22 FY23 vs FY22 FY23 vs FY21*
-----------------
52 weeks 52 weeks 2-year
to to Constant 2-year Constant
(GBP million) 30 April 1 May Reported currency Reported currency
2023 2022 YoY % YoY % YoY % YoY %
---------- --------- --------- ---------- ---------- ----------
UK and Europe 890 810 10% 10% 47% 47%
---------- --------- --------- ---------- ---------- ----------
US 653 428 52% 35% 119% 98%
---------- --------- --------- ---------- ---------- ----------
Group Revenue 1,543 1,238 25% 19% 70% 63%
---------- --------- --------- ---------- ---------- ----------
*FY21 includes a 53(rd) week
Q4 FY23 and FY23 revenue performance by category
Q4 FY
------------------
13 weeks 13 weeks 52 weeks
(GBP million) to 30 to to 30 52 weeks
April 1 May April to 1
2023 2022 YoY % 2023 May 2022 YoY %
--------- --------- ------ --------- ---------- ------
Luxury watches 329 258 28% 1,336 1,047 28%
--------- --------- ------ --------- ---------- ------
Luxury jewellery 22 27 (17%) 119 109 10%
--------- --------- ------ --------- ---------- ------
Other 20 19 1% 88 82 6%
--------- --------- ------ --------- ---------- ------
Group Revenue 371 304 22% 1,543 1,238 25%
--------- --------- ------ --------- ---------- ------
The financial information contained herein is unaudited.
Ecommerce revenue are sales which are transacted online.
Growth rates are calculated on unrounded numbers.
Conference call
A conference call for analysts and investors will be held at
9.00am (UK time) today. To access the conference call, please use
the following details:
Dial-in (UK): 020 3966 7028
Dial-in (all other locations): +44 20 3966 7028
Participant access code: 637954
Contacts
The Watches of Switzerland Group
Anders Romberg, CFO
+44 (0) 207 317 4600
Stephanie Crinnegan, Director of Investor Relations &
Corporate Affairs +44 (0) 776 710 0603
investor.relations@thewosgroup.com
Headland
Lucy Legh / Rob Walker / Joanna Clark +44 (0) 20 3805 4822
wos@headlandconsultancy.com
About the Watches of Switzerland Group
The Watches of Switzerland Group is the UK's largest luxury
watch retailer, operating in the UK, US and Europe comprising five
prestigious brands; Watches of Switzerland (UK and US), Mappin
& Webb (UK), Goldsmiths (UK), Mayors (US) and Betteridge (US),
with a complementary jewellery offering.
As at 30 April 2023, the Watches of Switzerland Group had 193
showrooms across the UK, US and Europe including 80 dedicated
mono-brand boutiques in partnership with Rolex, OMEGA, TAG Heuer,
Breitling, TUDOR, Audemars Piguet, Grand Seiko, BVLGARI and FOPE
and has a leading presence in Heathrow Airport with representation
in Terminals 2, 3, 4 and 5 as well as seven retail websites.
The Watches of Switzerland Group is proud to be the UK's largest
retailer for Rolex, OMEGA, Cartier, TAG Heuer and Breitling
watches.
www.thewosgroupplc.com
Disclaimer
This announcement has been prepared by Watches of Switzerland
Group PLC (the 'Company'). It includes statements that are, or may
be deemed to be, "forward-looking statements". These
forward-looking statements can be identified by the use of
forward-looking terminology, including the terms "believes",
"estimates", "anticipates", "expects", "intends", "plans", "goal",
"target", "aim", "may", "will", "would", "could" or "should" or, in
each case, their negative or other variations or comparable
terminology. They appear in a number of places throughout this
announcement and the information incorporated by reference into
this announcement and may include statements regarding the
intentions, beliefs or current expectations of the Company
Directors or the Group concerning, amongst other things: (i) future
capital expenditures, expenses, revenues, earnings, synergies,
economic performance, indebtedness, financial condition, dividend
policy and future prospects; (ii) business and management
strategies, the expansion and growth of the Group's business
operations; and (iii) the effects of government regulation and
industry changes on the business of the Company or the Group.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future and may be
beyond the Company's ability to control or predict. Forward-looking
statements are not guarantees of future performance. The Group's
actual results of operations, financial condition, liquidity, and
the development of the industry in which it operates may differ
materially from the impression created by the forward-looking
statements contained in this announcement and/or the information
incorporated by reference into this presentation.
Any forward-looking statements made by or on behalf of the
Company or the Group speak only as of the date they are made and
are based upon the knowledge and information available to the
Directors on the date of this announcement, and are subject to
risks relating to future events, other risks, uncertainties and
assumptions relating to the Company's operations and growth
strategy, and a number of factors that could cause actual results
and developments to differ materially from those expressed or
implied by the forward-looking statements. Undue reliance should
not be placed on any forward-looking statements.
Before making any investment decision in relation to the Company
you should specifically consider the factors identified in this
document, in addition to the risk factors that may affect the
Company or the Group's operations which are described in the 2022
Annual Report and Accounts in Risk Management and Principal Risks
and Uncertainties.
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