Watches of Switzerland repays furlough cash as it clocks surge in sales during pandemic
Watches of Switzerland has raised its full-year guidance and announced it will repay furlough cash, after clocking a major boost in profits and sales during the pandemic.
Operating profit at the luxury watchmaker beat expectations over the six months to 25 October, hiking 52 per cent year on year to £45.6m.
Adjusted earnings before tax jumped 27 per cent to £41.5m, up from £31.1m in April.
The company has subsequently raised its full-year revenue guidance from a previous range of £880m-£910m, to an estimate of £900m-£925m.
Shares jumped seven per cent to 558.5p at 8.12am.
It comes after the luxury watchmaker saw strong online UK sales during the period, while its stores in England remained shuttered during the month-long lockdown.
UK sales hiked 7.7 per cent over the half-year, with e-commerce sales up 102.4 per cent. Watches of Switzerland has now reopened its English stores, including a new City site in Broadgate.
Watches of Switzerland ranks as Britain’s biggest retailer of Rolex, Cartier, Omega, TAG Heuer and Breitling watches. An 18ct rose gold watch by Girard Perregaux sold through the company goes for £607,000 alone.
Meanwhile, US sales turbocharged earnings for the company, with strong demand for luxury goods during the pandemic catapulting its American balance sheet up 22.7 per cent.
“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,” said chief executive Brian Duffy.
The group announced it intends to repay furlough support handed out by the government during the coronavirus crisis, which it said will not affect its full-year performance.
Watches of Switzerland threw caution to hopes of a swift recovery for the British high street next year, warning that its updated guidance “assumes some further negative trading impact from potential lockdown measures in January and February”.
“We have also taken into account the removal of tax-free shopping in the UK from 1 January 2021,” said Duffy. “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.”
The company said it has carried out an extensive Brexit assessment and does “not foresee any material impact on our supply chain”.
Greg Lawless, analyst at Shore Capital noted that “demand for luxury good watches has never been stronger”, as customers turn to online shopping for home entertainment.
“As a custodian of luxury brands, Watches of Switzerland remains strategically well placed,” he said, adding that the company was “one to watch as we turn the clock to 2021”.