Watches of Switzerland’s US Sales Double in Q1
The company posted a strong start to the year but is cautious about the second half.
“The first quarter continued with strong momentum throughout, and we carry this positive momentum into the second quarter,” said CEO Brian Duffy.
“Despite the well-publicized concerns about the macro-environment, demand for our products remains robust, with client registration of interest lists continuing to extend.”
Here are five important takeaways from the company’s recent earnings report.
Watches of Switzerland had a strong start to the year, with U.S. revenue doubling.
For the first quarter ending July 31, the company posted £391 million ($471.4 million) in total revenue, up 31 percent year-over-year.
Sales in the luxury watches category rose 32 percent year-over-year.
Online sales climbed 14 percent year-over-year as the company continues to invest in its multi-channel strategy.
In the United States, Watches of Switzerland’s revenue doubled, totaling £152 million ($183.3 million) compared with £76 million ($91.6 million) in the prior-year period.
Differentiating itself from the competition has been key to its success, said Duffy.
“Within a large, diffuse, and growing market, we are benefitting from our distinctive business model—namely our investment in leading store design, the strength of our brand partnerships, our international scale, our bold marketing campaigns, our advanced systems technology, and our dedication to client experience,” he said.
The company is maintaining its guidance, citing a “more challenging” second half of the year.
Watches of Switzerland is reiterating its guidance for fiscal 2023, due to “a potentially more challenging trading environment” in the second half of the year.
The company expects to reach £1.45 billion to £1.50 billion ($1.8 billion to $1.9 billion) in revenue with adjusted EBITDA flat to 0.5 percent.
“While we continue to monitor the wider macro-economic environment, we believe that the strength of the luxury watch category, with its unique supply/demand dynamics, together with the success and agility of our model, will continue to support long-term sustainable strong sales growth,” said the company.
Its luxury jewelry category is keeping up the momentum.
Watches of Switzerland is best known for its luxury watch offerings, but its high-end jewelry category has been doing particularly well in recent quarters.
Revenue in the luxury jewelry category climbed 36 percent year-over-year to £27 million ($32.6 million) in the first quarter.
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 recently opened its first Bulgari boutique, which added to the increase in jewelry sales.
It’s growing its pre-owned business via Analog:Shift.
Watches of Switzerland acquired pre-owned and vintage watch seller Analog:Shift in September 2020 as a way to bolster its offerings in those categories.
Interest in vintage and pre-owned timepieces has been increasing, said the company at the time of the acquisition, and the lack of availability of select newer models from brands like Rolex and Patek Philippe added more opportunity.
Mayors Jewelers and Analog:Shift, both under the Watches of Switzerland umbrella, partnered with lifestyle brand Goop on a new e-commerce and retail venture in June.
As part of the partnership, Goop expanded its fine jewelry and timepiece assortment with a curated collection of vintage watches and jewelry staples from the brands on its website and in its Sag Harbor, New York brick-and-mortar location.
Its new Rolex boutique in London will be eight times the size of the old one.
Its home market of London is particularly important to the company.
Watches of Switzerland announced it will relocate its current 900-square-foot Rolex boutique on Bond Street to a new 7,200-square-foot space on Old Bond Street.
The move is set to take place next year.
“This new flagship will reflect the importance of the London market and the special relevance of London to the history of Rolex,” said Duffy.
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