Financials

Watches of Switzerland’s U.S. Sales Soar 86% in H1

FinancialsNov 10, 2022

Watches of Switzerland’s U.S. Sales Soar 86% in H1

The company opened five stores in the United States in the second quarter as it continues growing its footprint.

Pictured here is Watches of Switzerland’s store in the Mall of America. The company’s second-quarter revenue was up 29 percent year-over-year.
London—Watches of Switzerland had a strong second quarter as demand continued to exceed supply.

The watch company has high hopes for the months ahead, raising its fiscal year guidance.

“We are pleased to report another quarter of strong trading driven by broad-based sales growth across our portfolio of world-leading partner brands,” said CEO Brian Duffy.

Here are five important takeaways from the company’s recent earnings report.

Watches of Switzerland posted double-digit growth in the second quarter and first half.

For the second quarter ending Oct. 30, the company posted £374 million ($424.5 million) in total revenue, up 29 percent year-over-year.

In the United States, Watches of Switzerland’s revenue climbed 73 percent in Q2, totaling £159 million ($180.7 million) compared with £92 million ($104.6 million) in the prior-year period.

For the first half of the year, revenue was £765 million ($869.5 million), up 31 percent year-over-year.

In the U.S., first-half revenue totaled £311 million ($353.5 million), up 86 percent year-over-year.

The company’s recent acquisitions of independent jewelers, including Betteridge and a Ben Bridge store, have bolstered its numbers, but it would have seen double-digit growth even without them.

Excluding its acquisitions, quarterly revenue was still up 30 percent at constant exchange rates in the U.S. while first-half revenue climbed 44 percent.

Demand is still exceeding supply in the watch category.

Demand for the company’s high-end watches continues to outpace supply, a trend in its recent quarters.

Watches of Switzerland recently placed Rolex, Patek Philippe, and Audemars Piguet watches in its “super high demand” category but said supply issues have also impacted Zenith, Omega, and IWC.

“Demand remained strong through the quarter and continues to exceed supply, with client registration lists extending as consumers respond to innovative new products, impactful marketing and elevated client service,” said Duffy.

Quarterly sales in the luxury watches category rose 30 percent year-over-year while first-half sales in the category climbed 31 percent.

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The luxury jewelry category had another strong quarter.

Jewelry sales also continue to be strong at Watches of Switzerland’s stores.

Revenue in the luxury jewelry category climbed 38 percent year-over-year to £29 million ($33 million) in the second quarter.

In the first half, jewelry sales were up 37 percent to £56 million ($63.7 million).

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 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.

Movements in foreign exchange rates led to a more positive outlook.

Watches of Switzerland upped its fiscal guidance for the year ahead, citing a change in the foreign exchange rates.

The company is projecting a pound-to-dollar exchange rate of $1.20 in the second half of the year, compared with $1.14 as of press time.

This would mean an adjustment of about £15 million ($17 million) to group revenue and about £2 million ($2.3 million) to adjusted EBIT.

The company expects to reach £1.5 billion to £1.55 billion ($1.7 billion to $1.8 billion) in sales, up from its prior guidance of £1.45 billion to £1.50 billion ($1.65 billion to $1.7 billion).

It is predicting “more challenging market conditions in the second half” but expressed confidence in the strength of the watch and jewelry categories.

“While we continue to monitor the wider macroeconomic environment, we believe that the strength of the luxury watch and jewelry categories, the unique supply/demand dynamics of luxury watches and client registration lists, our portfolio of leading brand partnerships, and the success and agility of our model will continue to support long term sustainable sales growth,” said the company.

Its guidance reflects the “current visibility of supply of key brands,” announced pricing, and its confirmed showroom refurbishments, openings, and closures. It excludes “uncommitted capital projects and acquisitions.”

Watches of Switzerland is expanding its footprint.
 
In addition to its recent acquisitions, the company has been opening new stores in the U.S., the U.K., and Europe, and refurbishing some as well.

In the second quarter, the company opened 17 stores, including five in the U.S., nine in the U.K., and three in Europe.

Five mono-brand boutiques opened in the U.S., including TAG Heuer and Breitling stores in Boca Raton, Florida.

In its home market of London, Watches of Switzerland recently announced that next year 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.

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