The Watches of Switzerland Group reported sales rising to £905.1 million ($1.28 billion) for the financial year ending May 2.
It is the clearest indication yet that the luxury watch market has been far more resilient than the wider retail economy as customers looked to tangible assets with history, integrity and lasting value during the chaos of the pandemic year.
Sales were up by 13.3% over FY20 at constant currency and 11.7% after adjusting for the rising value of sterling.
Turnover for the latest year was 17.9% higher than FY19.
“We finished the year strongly and enter the new financial year with real momentum, continuing to prove the value of our highly differentiated model,” says WOSG chief executive Brian Duffy.
The UK accounts for two thirds of turnover, and stores there were closed for exactly half of the financial year. Despite that, group still grew sales by almost 4%.
In the United States, the group’s Manhattan flagship stores faced similar restrictions. But Florida, where it owns the Mayors chain of jewelers, enjoyed much greater freedom to trade.
US sales for the full year rose 38.5% at constant currency to £298.6 million while UK sales of £606.5 million were up 3.6%.
“Throughout the year we either met or exceeded our guidance despite the changing circumstances, in particular, the much longer-than-expected last lock down in the UK. In the UK, we delivered a very robust performance, overcoming a total of 26 weeks of store closures and hugely reduced travel and tourism business. In the US, we generated an outstanding result with very strong momentum,” Mr Duffy describes.
We responded to the challenging environment by increasing investment in capex, digital marketing, systems and stock which has resulted in the positive momentum that we carry into FY22. Our guidance for FY22 reflects our confident outlook for the luxury watch and jewellery categories and the success of our modern, international and multi-channel model.
Despite the group’s Mappin & Webb chain holding royal warrants as a silversmith since 1897 and being named Crown Jeweller in 2017, jewellery now accounts for less than 7% of turnover for the entire Watches of Switzerland Group. Luxury watches now bring in 87.1% of group revenue.
With shops closed for months and overseas tourists absent from the group’s biggest flagships in London and New York, Watches of Switzerland Group dramatically ramped up its clienteling, ecommerce and focus on domestic customers.
For the full year, sales to domestic customers rose from 72.5% of group turnover to 94.7%.
Ecommerce revenue rose by 120.5%, thanks to what the company describes as proactive application of advanced technology to digital marketing, customer relationship management and clienteling.
Profits are expected to be confirmed at between £104m and £107m when they are audited, up from £78.1m in FY20.
Net debt was dramatically reduced from £130m to £44 million.
The group initially used UK government support in the early days of the pandemic, but confirmed in accounts released today that all furlough money (the equivalent of our Paycheck Protection Program) would be repaid along with a £45 million Coronavirus Large Business Interruption Loan Scheme facility.
Approval has also been given to create a Watches of Switzerland Group Foundation with £3 million pounds already committed for this year and next.