Waiting lists for Rolex et al are still getting longer says Watches of Switzerland Group

Waiting lists are still getting longer, according to the Watches of Switzerland Group, as it announced another quarter of solid growth.

To be precise, waiting lists have been re-labelled as “client registration of interest lists”, but they are getting longer, according to WoSG chief executive Brian Duffy.

“The first quarter continued with strong momentum throughout, and we carry this positive momentum into the second quarter. Despite the well-publicised concerns about the macro-environment, demand for our products remains robust with client registration of interest lists continuing to extend,” says.

WoSG shares rose by almost 4% in morning trading following the announcement of results for the 13 weeks to July 31, the group’s first quarter of its 2023 fiscal year.

The value of shares, trading today at 916p, is still well below its peak price of 1,600p but off a low of 724p in July.

The company is valued at £2.2 billion, down from a peak of £3.5 billion.

Markets have been buoyed by an increase in sales of 8%, year on year, to £239 million in the UK, and 100% growth (76% in constant currency) in the United States to £152 million.

The quarter includes sales from several stores that were bought by WoSG in the US at the end of last year.

Watches of Switzerland acquired Betteridge in Greenwich, Connecticut, Timeless Luxury in Plano, Texas, and one of Ben Bridge’s boutiques in Mall of America outside Minneapolis in November last year.

Stripping out sales from these stores, growth in America would have been 58% at constant currency.

Worldwide, luxury watches accounted for 87% of revenue in the most recent quarter, the same proportion as a year ago, generating turnover of £342 million.

Jewellery was worth £27 million, a rise of 36% year on year.

The group aligned its quarterly financial reporting with an announcement that it will be opening a flagship Rolex showroom on London’s Bond Street next year.

Rolex to open 3-storey flagship on Bond Street

That will be part of annual capex spending of around £70-80 million in this financial year, which includes new offices in the UK.

Forecasts for the full year remain unchanged from the end of year report for FY22 with revenue expected in the £1.45 to £1.5 billion range and adjusted EBIT profit of £172 to £184 million.

Income from record sales for the global luxury watch industry is being invested in more advertising and promotion this year, including the return of Watches and Wonders in Geneva at the end of March.

This, in turn, is helping retailers like Watches of Switzerland, according to Mr Duffy. “The luxury watch market is dynamic with exciting developments on new products and marketing across a broad range of brands,” he says.

That rising tide may be floating all boats, but WoSG believes it has a number of unique competitive advantages. “Within a large, diffuse and growing market, we are benefitting from our distinctive business model – namely our investment in leading store design, the strength of our brand partnerships, our international scale, our bold marketing campaigns, our advanced systems technology, and our dedication to client experience,” Mr Duffy says. “We continue to focus on attracting new clients and growing market share in the UK and US,” he adds.

Economic storm clouds are gathering, a global cost of living squeeze is hurting household spending as inflation soars and prices are falling on the secondary market as dealers dump over-heated models, but if WoSG is bothered, it isn’t showing it.

“While we continue to monitor the wider macro-economic environment, we believe that the strength of the luxury watch category, with its unique supply/demand dynamics, together with the success and agility of our model will continue to support long-term sustainable strong sales growth,” the company states.