6th Oct 2020 09:08
(Alliance News) - Watches of Switzerland Group PLC on Tuesday upgraded its annual sales and profitability guidance following a stronger than expected second quarter performance.
Shares in Watches of Switzerland were up 19% on Tuesday morning at 397.06 pence, the best performer in the FTSE 250 index.
The British retailer of Swiss watches said that revenue for the first 10 weeks of the second quarter ending October 25 was stronger than expected, rising 18% in reported terms to GBP202.7 million from the year before. This represented a 20% revenue rise at constant currency.
Strong domestic UK sales offset lower tourist and airport business, and regional stores were outperforming London stores where footfall was still weak. Second quarter sales to date in the UK came to GBP145.1 million, up 13% year-on-year, with UK ecommerce sales 50% higher.
US momentum accelerated, with second quarter US sales to date at GBP57.7 million, up 35% reported and 43% at constant currency.
"Luxury watches have continued to outperform while luxury jewellery has performed well with growth in both the UK and the US markets," noted Watches of Switzerland.
Outlook-wise, the company upgraded its financial 2021 revenue guidance to between GBP880.0 million and GBP910.0 million from previously guided range of GBP840.0 million to GBP860.0 million.
It also upgraded its forecast for earnings before interest, tax, depreciation, and amortisation margin, now expecting a 1.0% to 1.5% rise year-on-year. It had previously been expecting this to be flat.
Net debt is predicted at between GBP80.0 million and GBP100.0 million versus GBP90.0 million to GBP110.0 million estimated previously.
All other guidance has been maintained.
Watches of Switzerland scheduled to post its interim results on December 17.
Chief Executive Brian Duffy said: "Our guidance for the balance of the fiscal year assumes that the positive trend experienced in Q2 will be moderated by the impact of pandemic related retail disruption in the UK and the US and uncertainty in the US economy, impacting mainly in Q3. We do not assume any improvement in recent trends regarding the travel or tourist sectors.
"Looking ahead, we will continue to focus on our strategy by investing in high quality growth through selective capital projects and targeted marketing activity."
By Anna Farley; [email protected]
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