Flushed with the success of its initial public offering, The Watches of Switzerland Group is showing no signs of slowing down.
The group confirmed sales increased by 22.5% to £773.5 million in the financial year that ended on April 30 and, thanks to the proceeds of the IPO, its debt burden has been significantly reduced, which means it has headroom to invest in new stores, expansions, refurbishments and acquisitions in both the UK and the United States.
“We are geared for growth and looking for high quality opportunities, so if they come along either in the UK or the US, we will take a look at it. There are things we know we can bring to benefit most opportunities in terms of support, merchandising, marketing, so if we see a business that we can improve and it fits strategically with our plans then of course we would look at that, just as we would look at new projects and expansions,” Brian Duffy, CEO of The Watches of Switzerland Group, told WatchPro.
“I would not forecast anything on a significant scale,” he continues. “In the US, the two big two are Mayors and Torneau, which have both changed hands, but it is likely that there will be some small groups or even single store opportunities that are very much set up to handle. We have the IT systems, we have head office structure in Fort Lauderdale and Leicester to do acquisitions, so I would say that in the next 2-3 years we are likely to make acquisitions.”
Acquisitions and new openings appear more likely in the United States than in the UK, particularly in key luxury markets like California, where the group does not currently have any stores.
“There are various discussions going on and we hope something will happen there [in California]. But there are many great American cities, developing cities that are under-served with the sort of retail that we bring. We can analyse the American market very well. We look at details like GDP per state and are open to any opportunities that come along, be that new developments from landlords, acquisitions, whatever,” reveals Mr Duffy
The group revealed its 2019 financial year results around the time of the IPO in June, but there is additional detail in a trading update today. Luxury watches now make up 81.6% of group sales, up from 78% last year.
When it comes to organic growth within its current estate on both sides of the Atlantic, Mr Duffy says that sales are limited more by supply-side issues than demand. Certain luxury watches are subject to waiting lists that can last for years and in some cases are sold only to selected clients, the company admits.
“It continues to be an important subject for all retailers of Rolex, Patek Philippe and Audemars Piguet world-wide. What we need to keep doing is investing, expanding and elevating. As you do, you are more likely to get support from these brands. That is the only thing that we have found to be reliable. Overall, the brands are very fair in how they allocate stock,” Mr Duffy describes.