ii view: Watches of Switzerland sets sights on Europe
Both bricks and clicks sales and brands including Mappin & Webb and Goldsmiths. We assess prospects.
11th February 2022 15:19
by Keith Bowman from interactive investor
Both bricks and clicks sales and brands including Mappin & Webb and Goldsmiths. We assess prospects.
Third-quarter trading to 30 January
- Revenue up 28% to £348.1 million
- Expects full-year revenue and profit to be towards the top end of its previous estimates
Chief executive Brian Duffy said:
“I am pleased to report continued strong momentum for our Group following a successful Christmas trading period. We have delivered impressive growth in both luxury watches and luxury jewellery in both the UK and US markets, demonstrating the value of our portfolio of world-leading partner brands.”
ii round-up:
Watches of Switzerland (LSE:WOSG) is a retailer of both luxury watches and jewellery across both the UK and US.
Operating just over 170 stores, it sells via five brands names: Watches of Switzerland in the UK and the US; Mappin & Webb and Goldsmiths in the UK; and Mayors and Betteridge in the US.
Its outlets also include 51 dedicated mono-brand stores in both the UK and US working in partnership with Rolex, TAG Heuer, OMEGA, Breitling, Grand Seiko, Bvlgari and FOPE.
For a round-up of thelatest trading update, please click here.
ii view:
Luxury watch sales account for around 85% of overall sales with the balance split between luxury jewellery and servicing, repairs and insurance products. On a geographical basis, the UK accounts for almost 70% of overall sales and the US the balance.
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For investors, stores at London’s Heathrow airport remain under the shadow of hindered international travel and reduced foot traffic. Costs for business generally are rising and the company, unlike rival luxury apparel seller Burberry (LSE:BRBY), does not currently pay a dividend.
More favourably, sales continue to grow, with management’s previous suggestion of expansion into Europe now being actioned with mono-brand outlets agreed in Sweden, Denmark and the Republic of Ireland. The sale of hard assets at a time when central banks have been printing money has attraction, while its online sales were invaluable during previous pandemic lockdowns. In all, and while some caution appears sensible given a doubling in the share price over the last year, an analyst-estimated consensus fair value share price of over £16 looks to offer room for long-term optimism.
Positives:
- Growing geographical diversity
- Exposure to hard assets
Negatives:
- Tourist sales remain hindered by Covid-19
- No dividend payment
The average rating of stock market analysts:
Buy
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