Bucherer’s acquisition of The Watch Gallery in 2017 is looking like an increasingly shrewd bit of business.
The deal was sealed at a time when the pound had slumped against the Swiss franc following the vote to leave the EU, making the price more attractive, and it snagged a company with significant growth potential, as accounts published today demonstrate.
The Watch Gallery, formerly known as DM London, had been generating sales of around £50 million per year in the period from 2012 to 2016, but this leaped to £74 million in the year of the Brexit vote and soared to £92 million in 2018 as visitors flocked to London to take advantage of the weakened pound.
In an interview with WatchPro in August, Bucherer UK chairman David Coleridge said sales were up 13% year-to-date. If that growth is maintained for the remainder of 2019, turnover will reach £104 million.
“Growth has been strong across the board. It is a very nice picture at the moment,” he said.
The 2018 accounts are the first full year of fully consolidated accounts of the Bucherer’s wholly owned UK subsidiary and show record turnover for the group that runs watch sales within Selfridges, standalone stores in Covent Garden and Westfield shopping centre in West London, and a Rolex boutique in Knightsbridge.
The company is opening a major new showroom in London’s Covent Garden next year, replacing its current smaller store.
Operating profit was reported sharply down at just £166,000, but EBITDA, the accountancy measure which Bucherer chooses to use as its key performance indicator, was £7.3 million,
“Sales and EBITDA grew strongly during the year due to both underlying growth and the continuing beneficial effects of the more competitive pound,” a director’s statement accompanying the accounts describes.
Gross profit rose strongly from £17.6 million to £24 million between 2017 and 2018.
In a paragraph on principal risks and uncertainties, the company describes its reliance on sales in central London, which can be affected by factors that influence people coming to the capital. However, it says that growing ecommerce sales do mitigate this risk by broadening its customer base.