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Watches of Switzerland plans to pay back government’s furlough cash

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The Watches of Switzerland Group (WoSG) lost an entire quarter of in-store sales during the March to June UK-wide first lock down and 44% of its trading hours during autumn’s mixture of tiered restrictions and firebreak closures, but the business adapted and performed so well that it is now offering to repay the British Treasury’s furlough cash.

In a trading update to the London Stock Exchange this week, the group reported revenue for the six months to October 31 was down 3.4% (2.6% in constant currency terms) but EBITDA rose 26.5% to £52.2 million.

An interim statement on the current quarter, for the seven weeks to December 13, shows sales rising over 11% year-on-year and improving profitability.

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This, despite its flagship ‘golden triangle’ of central London showrooms and airport stores being starved all year of high-spending tourists and business travellers.

“I am proud of our colleagues who have demonstrated a positive attitude and commitment whilst continuously adapting to this year’s many challenges,” says WOSG CEO Brian Duffy (pictured top with a charity donation cheque for the Prince’s Trust).

“I am pleased we have been able to maintain full employment and salary payment throughout lock down and disrupted trading. We received the UK government’s furlough support while our stores were closed due to covid-19 restrictions, however, given the very strong performance to date and projected, we are now planning to repay it,” he reveals.

The performance is all the more impressive given Rolex, which represented more than half of WOSG sales in 2019, does not allow its retail partners to sell its watches online. Patek Philippe and Audemars Piguet have the same policy.

“Despite significant headwinds throughout the period, we achieved a good sales performance with domestic customers offsetting lower tourist and airport sales in the UK, and elevated momentum in the US.  The Group’s ambition, adaptability and technical strength were positively demonstrated through enhanced digital activity, a step up in online, increased marketing, CRM and click and collect.  With positive cash management, we have further reduced debt and have a significant liquidity headroom,” Mr Duffy reveals.

WOSG may be offering to repay furlough payments to The Treasury, but Mr Duffy also has a strong message for Chancellor Rishi Sunak about withdrawing VAT rebates for non-EU visitors from January 1.

“We believe that the UK Government has misjudged the impact of removing tax-free shopping for tourists and we will continue to support all efforts to have this changed,” he insists.

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