Watches of Switzerland will makes its debut on the London Stock Exchange early in June with shares given an initial price in the range of 250p to 277p.
The price is based on a price to earnings multiplier of 13x to 14x on net income of £47 million forecast for April 2020, and would value the company at between £610 million and £660 million.
An alternative way financial markets value a company, which takes into account debt and cash on the balance sheet, gives an implied enterprise value of £730m to £780m.
A date for the initial public offering (IPO) has still not been narrowed down from the previously stated ‘early June’ timeframe.
Brian Duffy, CEO of Watches of Switzerland Group said at the time he first announced the IPO: “I am very pleased to confirm our intention to float Watches of Switzerland Group on the London Stock Exchange. Our transformation is complete, the Group is now the UK’s leading luxury watch retailer and has successfully entered the significant, but underdeveloped US market. I am very excited for what lies ahead and the opportunity to take our growth strategy to the public markets.”
The Company intends to use the net proceeds from the issue of new Shares pursuant to half its current net debt from £240 million to £120 million. One quarter of the company’s shares will be available, with an additional 10% potentially released if demand is strong.
Watches of Switzerland Group has a 35% share of the UK luxury watch market by value of total luxury watch sales in 2018; and a 41% share of the UK luxury watch market by value of total luxury watch sales in 2018 excluding sales of mono-brand stores owned by luxury watch brands. It also has 21 stores in the United States.
“There are significant growth opportunities ahead of us, both in the UK and the US, many of which are already being realised. We have a proven track record, an experienced management team and strong brand support for our plans. At Watches of Switzerland Group we have the best teams in the business and credit for our success goes to them. We love what we do and I am very excited for what lies ahead and the opportunity to take our growth strategy to the public markets,” Mr Duffy says.