Watches of Switzerland Group confirmed its scarcely believable FY 2021 financial results today with top line growth of 13.3% to £905.1 million ($1.25 bilion) in the year to May 2 and profit growth of 35% to £105.4 million ($145 million) — all achieved under the shadow of the pandemic, which closed its UK and New York stores for the best part of half of the year.
The UK now accounts for around two thirds of turnover, and the USA the remaining third.
WOSG’s share price has rocketed since the early days of the first lock down in March last year from a low of 179p to 840p today.
The group is now valued at over £2 billion.
Accompanying the 2021 full year financial report, WOSG also unveiled a five year plan that anticipates acquisitions in the United States and European Union countries along with opening monobrand boutiques, further growth in travel retail, ecommerce and unspecified ‘new developments’.
The five year plan predicts the UK market for luxury watches — worth around £1.3 billion at retail today — to grow by 8% to 10% per year, and that WOSG will outperform the market by 2% per year.
If it achieves compound annual growth of 10%, group sales will rise to £976 million in 2026.
In the United States, where the group owns the Majors network in Florida along with multibrands and monobrands in Las Vegas, New York and Boston, WOSG is forecasting 25% annual growth every year through to 2026, which would take top line sales to £915 million.
Accurately forecasting a five year plan in the European Union will, naturally, be more speculative, but the group anticipates that it will contribute between 5% to 8% of group revenue by FY26; which could be around £150 million.
Geographical expansion takes the strain off group sales to wealthy tourists in the most expensive city centers and airport retail, and the organisation has a stated aim to increase business with domestic customers.
Tourists contributed 27.5% of group sales in FY2020, but this dropped to just 6% in the pandemic-affected year. In its five year plan, the group does not anticipate any significant recovery in international tourism spend in the UK with sales from the domestic customer (UK, US, EU) expected to be approximately 92% of Group revenue in FY26.
Commenting on the FY21 results and the five year plan, Watches of Switzerland Group CEO Brian Duffy says: “Since 2014 we have delivered a sustained track record of strong, profitable growth, consolidating our position as the UK’s leading luxury watch retailer.
“We have further developed our long-standing partnerships with the most prestigious luxury watch brands, invested in our stores and in leading edge systems and technology while further enhancing our bold, impactful and digital-led marketing approach. Through focused investment we have built a modern, digitally advanced multi-channel retailer and have achieved outstanding momentum in the US since our entry into the market in late 2017.
“Looking ahead, we are excited to capitalise on the significant opportunity to accelerate our strategy. The UK luxury watch market continues to grow, and we continue to advance our leading position. In addition, we plan to achieve growth through further geographical diversification, becoming the clear leader in the US market, and establishing a presence in the EU with the targeted roll-out of our proven model.
“Our growth projections reflect our best estimate of future supply based on our past experience of investment and expansion. The ability to grow in our category is partly determined by restricted supply of key brands and is therefore not guaranteed.”