E-commerce sales up 65% enable strong Watches of Switzerland performance, interims show

Watches of Switzerland has continued to deliver a strong sales performance, despite a tough trading environment caused by the covid pandemic.

Interim results show that despite store closures and reduced tourism, the retail group has managed the volatility well and saw a notable increase in e-commerce sales.

Online sales are reported to have grown by 65%.

Looking at the interim results more closely, H1 revenue fell by 2.6% but adjusted EBIT increased by 33.1% while FCF conversion remained strong at around 223%.

Responding to the results, Russell Pointon, director of consumer for Edison Group explained how Q1 revenue fell by 27.6%, despite trading for only 38% of normal trading hours.

In Q2, revenue grew by 19.8% despite trading for 81% of normal trading hours and the seven weeks so far of Q3 has started well with 11.9% constant currency growth.

Pointon said: “Watches of Switzerland’s interim results and current trading show that it is performing very well against the challenging backdrop of store closures and reduced tourism, and as a result it has increased guidance for the full year. H1 revenue fell by 2.6% in constant currency but the adjusted EBIT increased by 33.1%, and FCF conversion was very strong at c 223%. There was a notable increase in ecommerce sales (+65%) and better conversion versus reduced footfall and trading hours.

“The trends within the period were volatile as might be expected given the phasing of lockdowns etc but the performance whilst trading looks very good: Q1 revenue fell by 27.6% despite trading for only 38% of normal trading hours and Q2 revenue increased by 19.8% despite trading for 81% of normal trading hours. Q3 (7 weeks) has started well with 11.9% constant currency growth.”

Adding: “With respect to the outlook, guidance for revenue has increased to £900-925m (£880-910m), EBITDA margin to +1.5/2% (+1/1.5%), and a lower tax rate, which is offset in part by an increase in D&A. Given the strong performance they intend to repay furlough support received from the UK Government and they foresee no supply impact from Brexit.”