US Sales Grow 44% for Watches of Switzerland in ‘Tremendous’ Year
Plus, CEO Brian Duffy on how supply shortages have spread to brands beyond Rolex and Patek Philippe.
The company has had a “tremendous year,” said CEO Brian Duffy.
“It is particularly pleasing to have delivered this performance against such strong prior-year comparatives, with the expertise and dedication of my colleagues proving invaluable,” he added.
Here are five important takeaways from the company’s recent earnings report, including Duffy’s take on the luxury watch supply problem.
Watches of Switzerland had a strong start to the year.
For the fiscal year ending May 1, the company posted £1.24 billion ($1.48 billion) in total revenue, up 37 percent year-over-year.
Sales in the luxury watches category rose 36 percent year-over-year on a constant currency basis.
Online sales climbed 5 percent year-over-year, but more than doubled compared to fiscal 2020, up 128 percent.
In the United States, Watches of Switzerland’s revenue totaled £428 million ($512.2 million), up 44 percent year-over-year.
Online sales in the U.S. are performing particularly well, said the company, with year-over-year growth driven by “expanded brand offerings, dedicated inventories, and marketing investment.”
The year ahead looks bright.
While companies like Pandora and Brilliant Earth have been hedging their bets, forecasting a slowdown in sales ahead, Watches of Switzerland has maintained a more bullish outlook.
The company said it’s heading into fiscal 2023 with “strong momentum” and believes the worst of the pandemic-related disruptions is behind it.
Watches of Switzerland predicted a recovery in foot traffic, including in its airport stores.
“Whilst we are cognizant of the wider macroeconomic environment, we believe the strength of the luxury watch category, with unique supply/demand dynamics, together with the success of our model will continue to support sustainable strong sales growth,” said the company.
Looking ahead, Watches of Switzerland maintained its full-year revenue guidance, expecting to reach £1.45 billion to £1.50 billion ($1.8 billion to $1.9 billion).
The jewelry category is still going strong.
Watches of Switzerland is best known for its luxury watch offerings, but its high-end jewelry category has been doing exceptionally well recently.
Revenue in the luxury jewelry category climbed 86 percent year-over-year on a constant currency basis.
The growth reflects a strong market, said the company, but the category also has benefited greatly from recent acquisitions.
Watches of Switzerland acquired a number of independent jewelers last year, including Betteridge, which has stores in Greenwich, Connecticut, and Vail and Aspen, Colorado.
It also scooped up the Ben Bridge store at Mall of America outside Minneapolis-St.Paul and Timeless Luxury Watches in Plano, Texas.
Watches of Switzerland also opened its first Bulgari boutique, which added to the increase in jewelry sales.
The company is continuing to grow its U.S. footprint.
Watches of Switzerland wasn’t content with just its recent acquisitions; it continues to open new stores here as well.
In the U.S, the company has 23 multi-brand stores, up from 17 last year, and 17 mono-brand stores, up from 13.
As of May 1, Watches of Switzerland had a total of 171 stores across the U.S. and U.K.
The retailer acquired a Rolex-anchored jewelry store in New Jersey last month, and recently opened a flagship store in Kenwood Towne Center in Cincinnati, Ohio.
The company also sunk money into its e-commerce performance in the U.S., investing in pre-owned watch e-tailer Analog:Shift, fitting it with a redesigned website, dedicated inventories, and a new office in New York.
“Our sustained capital investment has continued to support our growth plans. We have seen a strong performance from our recently opened and refurbished showrooms in the U.K. and U.S., and we have big plans for our European business,” said Duffy.
The company opened a Breitling boutique in Stockholm last month, with plans to open five mono-brand boutiques in Sweden, Denmark and Ireland this year.
A strong demand for luxury watches is fueling the company’s confidence.
Demand for high-end watches continues to exceed supply.
Watches of Switzerland has placed Rolex, Patek Philippe, and Audemars Piguet watches in its “super high demand” category.
In an interview with Bloomberg, Duffy said the supply issue has also spread to brands like Zenith, Omega, and IWC.
It’s difficult to keep Zenith chronographs, IWC pilot watches and Omega James Bond Seamaster and Speedmaster models in stock, he told Bloomberg.
“A lot of what we are selling we can’t get enough of in the first place,” Duffy said. “The whole industry is characterized by more demand than supply.”
This has been mostly a positive for the company, which reported average selling price growth across its brands.
Watch prices are already up an average of 4 to 5 percent, he said, but the company doesn’t expect to implement another “significant” price increase this year.
In a press release, Duffy said: "We enter FY23 with strong momentum with consumer demand continuing to outpace supply, and within this environment, we are benefitting from our strength both in showrooms and online.”
Watches of Switzerland expects to report its next results on Aug. 16.
Editor’s note: This story was corrected post-publication to reflect the fact that these results are for the full fiscal year, not the first quarter as previously reported. National Jeweler regrets the error.
He was previously editor-in-chief at Hodinkee.
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