16th May 2024 13:13
(Alliance News) - Watches of Switzerland Group PLC on Thursday hailed a strong finish to its financial year, helping its shares eat into a sizeable year-to-date fall, and soothe some worry about the luxury goods sector.
Shares in the company traded 11% higher at 374.20 pence each in London on Thursday afternoon, but have slumped 45% so far this year, amid fears of the health of the luxury goods sector.
The Leicester, England-based watch retailer expects to report revenue of GBP1.54 billion for the year ended April 28, flat on the year prior on a reported basis, but up 2% at constant currency.
Adjusted earnings before interest and tax between GBP133 million and GBP136 million are expected, at worst a 19% fall from GBP165 million.
Chief Executive Officer Brian Duffy said: "We finished the year strongly, with Q4 sales in line with guidance and ahead of consensus. Particularly pleasing was the performance in the US, with sales up 14% in the period."
Fourth-quarter revenue climbed 3% on-year to GBP380 million, as it noted "strong" demand for key brands. It said its pre-owned Rolex watch offering is "performing ahead of expectations".
Its fourth-quarter showing was "in line with guidance and ahead of consensus".
Jefferies said investors "should cheer more resilient than feared" fourth-quarter numbers. Though analysts at the investment bank said WOSG will likely need to back this up with continued strong trade to mount a more sustained share price recovery.
"The market will likely maintain a 'show me' approach from here, and consistency of delivery will be needed for a proper multiples rebuild," Jefferies said.
Jefferies rates the stock at 'buy'.
Looking ahead, the company said it is "cautiously optimistic" about financial 2025, after "challenging trading conditions" in the year just ended.
"The industry as a whole is being more conservative on production given the current volatility in the market, which we believe is a responsible approach to the long-term stability of the luxury watch market," WOSG said.
For the new financial year, it expects revenue between GBP1.67 billion and GBP1.73 billion. It would represent constant currency growth between 9% and 12%.
Analysts at broker Peel Hunt commented: "This at first glance looks encouraging, as it is ahead of existing consensus, but existing consensus does not include Roberto Coin, whereas guidance does.
"Unpicking that, it is a [around a] 2% downgrade to sales and Ebit guidance, no disaster but not ideal either. Also, strategically, the company are coming out of Europe and putting more chips on the table in jewellery and pre-owned, which is not to our taste. It implies an upgrade to our numbers (we did not upgrade for Roberto Coin last week), but fundamentally forecast momentum is negative. Therefore, the shares have little appeal."
Earlier in May, the company said it acquired Roberto Coin Inc from Roberto Coin Spa for USD130 million. Roberto Coin Inc is an associate company of Roberto Coin Spa, a designer of handcrafted jewellery. Roberto Coin Spa is the sixth-largest jewellery brand in the US by sales at retail value.
CEO Duffy added Thursday: "Our acquisition of Roberto Coin Inc (the exclusive North American distributor of Roberto Coin) dramatically accelerates our luxury branded jewellery strategy, and we see enormous potential in bringing together this iconic brand with our retailing expertise."
By Eric Cunha, Alliance News news editor
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.
Related Shares:
Watches Switz