Watches of Switzerland Group has reiterated its confidence in the luxury watch sector, predicting growth in its current financial year will exceed 20%.
The group’s FY23 term runs from May 2022 to April 2023, a period when a post-pandemic economy is slowing and facing historically high inflation.
Despite the current headwinds, group CEO Brian Duffy has restated his confidence that the premium watch business will weather the storms.
“We enter FY23 with strong momentum, with consumer demand continuing to outpace supply, and within this environment we are benefiting from our strength both in showrooms and online,” Mr Duffy says in a report confirming the group’s FY22 results.
WoSG turnover rose by 40% at constant currency rates to £1.238 billion in the year to May 1 with adjusted EBITDA profit soaring by 54% to £162 million. Net debt was cut from £44 million to £14 million.
The luxury watch market was running red hot in both WoSG’s markets of the UK and USA throughout 2021 and the first quarter of 2022, but the warning lights on the economic dashboard have been flashing amber since the start of the second quarter.
Despite this, WoSG’s optimism is undimmed since its interim end of financial year report was issued on May 18, with its forecast for FY23 sales remaining at £1.45 – £1.5 billion, a 20% rise.
“The Group enters FY23 with strong momentum and anticipates that disruption from the pandemic is now largely behind us with ongoing recovery in footfall and airport traffic,” the company states in a note on the outlook for the current financial year.
“Whilst we are cognizant of the wider macro-economic environment, we believe that 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,” the report continues.
“We are undoubtedly operating in a growing segment,” Mr Duffy concludes.
I think this is more about how WoS et al fleece customers with their “purchase history” racket, rather than the market being buoyant.
Their model is to get people in store to pre-order Rolex and other premium watches, with the expectation that you “build a relationship”, read “spend money”, until you get the actual watch you want.
I was refused point blank a watch a WoS store had in stock yesterday at a WoS boutique because “we need to develop a relationship” before they could. It wasn’t a premium or limited availability model, they were just chancing that I didn’t know it was available to just buy. I went to a different store and I’m wearing the watch as we speak.
One thing is appearing exclusive and inferring status through ownership of a luxury brand, another is manipulating your customers into buying products they never wanted or they can kiss their Rolex GMT goodbye.