Watches of Switzerland increases profit guidance as sales surge

The luxury watch retailer said it now expects EBITDA margins to advance between 1% and 1.5% compared with last year. It previously said margins would be flat year on year.

Full-year revenues are now forecast to come in between £880m and £910m, compared with its previous guidance of £840m to £860m. 

The revised guidance comes after sales during the first 10 weeks of its second quarter – covering the 13 weeks to October 25 – surged 20% on a constant currency basis to £203m.  

Watches of Switzerland said sales in its core UK market were up 12.6% to £145m over the 10-week period, as ecommerce revenues surged 50%.

The retailer said the increase was driven by “strong” demand from domestic customers, which offset lower tourist spend.

Its regional stores outperformed locations in major cities such as London, where footfall “remains weak”.

Watches of Switzerland’s sales in the US accelerated at the quicker rate of 43% to £58m in the first 10 weeks of its current quarter.

The retailer’s chief executive Brian Duffy said: “Trading momentum has further improved in Q2. Stronger than anticipated UK domestic sales are offsetting lower tourist and airport traffic, whilst regional stores are continuing to outperform London stores.

“Furthermore, the strong momentum we have established in the US has further accelerated. All US regions are contributing to this positive trend.”

Duffy added that Watches of Switzerland’s new profit guidance assumes that current sales momentum will be “moderated” in both the UK and the US as a result of “pandemic-related retail disruption” during its third quarter.

He warned the business was not expecting “any improvement” in the travel and tourism sectors, which could continue to impact its airport locations.

Watches of Switzerland will report its half-year results on December 17.