Watches of Switzerland sees sales, earnings dip in FY24, but US ops impress

Despite tougher market conditions in the UK and Europe’s watch and jewellery sector, Watches of Switzerland Group (WOSG) remains in a strong position.

But those heady days of post-pandemic runaway success have certainly calmed down, with FY24 group sales flat and core earnings and margins down in the 52 weeks ended 28 April. 

Yet the positives were still on show, and WOSG said it continues to gain market share, sees “strategic progress” in its expansion programme and, importantly, a steady uplift in sentiment.

And while sales numbers in the UK and Europe markets may have fallen, there was growing strength in the US, which now represents half of group sales.

Importantly, the company is “reiterating confidence in FY25 full-year guidance and Long Range Plan targets”.

A “proud” CEO Brian Duffy did have to admit FY24 saw “undoubtedly a more challenging market”. But he said: “We cemented our position as a leading international luxury watch and jewellery retailer and delivered further market share gains in both the UK and US, driven by our proven, differentiated business model.”

Also important is news that the UK market “is starting to show signs of stabilisation” after those negative numbers.

But for FY24, UK and Europe sales were down 5% both on a reported and constant currency basis, “impacted by significant price increases overall at a time of reduced consumer confidence influencing discretionary spending… and we see these pressures easing in FY25”.

UK & Europe sales for the period fell to £846 million from £890 million a year ago as US ops jumped 11% to £692 million.

Those US gains meant overall sales were at least flat on a reported basis at £1.538 billion and were up 2% on a constant currency basis.

Luxury watches, which represents 87% of group revenue, did see revenues rise (+3% constant, +1% reported), thanks to that stronger US performance.

However, luxury jewellery revenue fell 13% at constant currency and 14% reported, but WOSG noted that sales steadily improved throughout the year with Q4 the best period. Also, luxury branded jewellery “significantly” outperformed non-branded jewellery.

Adjusted EBITDA fell to £179 million from £201 million and the adjusted EBITDA margin slipped to 11.6% from 13.1%. Statutory operating profit also dipped 33% to £120 million.

Meanwhile, that Long Range Plan continues with the group investing “for high-quality growth across showroom projects and strategic acquisitions”. 

This included the 15 Ernest Jones showrooms acquired last November, and the acquisition of Roberto Coin, “which dramatically accelerates our luxury branded jewellery strategy”.

Duffy added: ”We have an impressive programme of showroom developments on both sides of the Atlantic and our strongest ever pipeline of committed projects”, which includes the flagship Rolex boutique on Old Bond Street, London, Audemars Piguet Townhouse in Manchester, Rolex boutique in Atlanta, Georgia, and a Rolex anchored multibrand in Plano, Texas.

He concluded: “Our strategic momentum underpins our confidence in our FY25 guidance and Long Range Plan objectives of doubling sales and profit by 2028, capitalising on our leading market positions and the unique growth opportunities ahead.”