Watches of Switzerland Group LON:WOSG, the FTSE250-listed, UK-based retailer of high end luxury watches and jewelry published its results for the six months to end-October and has continued its strong performance with North America leading the way.
North America is increasingly becoming a core market for WOSG, as it now contributes 43% of group revenues, this increased, according to Brian Duffy, CEO by 11% [on a constant currency basis] in the period compared to the previous year.
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However, it wasn’t all gravy for WOSG as revenue from UK and Europe fell 4% to GBP328m and on reported rates [as opposed to on a constant currency basis], group revenue was flat [in fact slightly down] to GBP761m.
As previously reported, Duffy has spoken in the past about how the jeweler’s clientele, the higher category of earners, was insulated against the general recessionary climate and was continuing to spend through the economic downturn. However, as reported in the summer, even this segment was starting to curb spending and revenue was starting to decline.
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The reduction in revenue also saw earnings decline to GBP94m, a 10% fall. EBITDA margins also fell by 130bps. Operating profit was also down by 16% to GBP78m, with profit before tax falling to GBP67m, a fall of 20%
Watches of Switzerland: proven business model
Despite the somewhat disappointing results Duffy was still upbeat. He said: “Our good first half performance reflects the group’s growing leadership position in our chosen markets as the strength of our longstanding brand partnerships and our proven business model continue to drive our performance forward. We are particularly pleased with performance in the US, where we grew revenue +11% in the period…”
He did note though that the poor economic climate does actually have an impact on luxury goods as well as the rest of the retail sector. Duffy said: “The consumer environment in the UK continues to be more challenging and UK and Europe revenue was -4% in the period, impacted by the timing of product intake in Q1 FY24 and temporary showroom closures for refurbishment.”WOSG opened trading today (7th December) at 639.22p, and was down to 625.46p in the first hour’s trading. Over one-year WOSG share price has fallen by -32.4% and over two years is down -56.8%. The company’s shares have ranged between 475.4p and 1,037p over a 52-week period. The company has a market cap of GBP1.6bn
As the company goes into its critical Christmas period, it must be hoping for a strong trading season to bring up its end-of-year results.
