Strong results from the luxury watch retailer and a major housebuilder helped the City’s second index make gains today.
A record for shares in Watches of Switzerland (LSE:WOSG) and more strong trading at house-builder Bellway (LSE:BWY) highlighted the favourable conditions pushing the FTSE 250 index to new highs today.
The luxury watch retailer, which operates in the UK and US under brands include Goldsmiths, Mappin & Webb and Mayors, said there had been further acceleration in its momentum after first-quarter revenues rose 45.8% on the same period two years ago.
Its shares today leapt 5% or 52p to 1,076p and are now more than double their level seen at Christmas, partly driven by UK customers spending their lockdown savings on new timepieces.
Confidence in the stock is further underpinned by chief executive Brian Duffy's longer-term ambitions for the business, which include being the clear leader in the US market and establishing a presence in Europe. It is already the UK's largest luxury watch retailer.
Duffy said last month that he expects the UK to show compound growth of between 8% and 10% up to 2026, with acquisitions, digital marketing and strength in e-commerce helping the US division to expand by between 25% and 30%. It only entered the US market in late 2017.
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In today's update, Duffy said trading in the US was going from “strength to strength” and that the UK business had been extremely strong after sales doubled on a year ago and by 43% versus the equivalent pre-pandemic quarter two years ago.
Analysts at HSBC left their price target unchanged at 1,100p following the update, which they said highlighted a company with plenty of growth potential.
HSBC said: “We believe WoS's portfolio is well placed and that the watch retail sector should still see the loss of relevance of many ‘old school operators’ to the benefit of WoS.”
The shares now trade on a lofty 30 times 2022 earnings, but HSBC said this was offset by forecasts for an “impressive” 31% compound growth rate in earnings up to 2024. Analysts at Investec and Barclays have price targets of 1,120p and 1,115p respectively.
The WoS shares were the strongest performing in the FTSE 250 index, which continues to outperform its blue-chip counterpart after making further inroads into record territory.
Other mid-cap stocks on the rise included workspace business IWG (LSE:IWG) after its interim results showed further month-on-month improvement in key operating metrics as the move to hybrid working continues to create demand for flexible desk space.
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Chief executive Mark Dixon said: “This fundamental shift in the way people work is clearly a positive tailwind for IWG over the medium to longer term and we are seeing increasing levels of interest from enterprises wishing to transform their working practices.”
The group, which has 3,300 locations in towns and cities worldwide, reported occupancy at 69% alongside reduced half-year losses of 12p a share. The stock rose 10.5p to 329.9p.
Bellway, meanwhile, continues to benefit from strong market conditions after revenues for the year to the end of July rose 41% to £3.1 billion, just 2.5% below the level in the 2019 financial year. The number of housing completions rose by 34.8% to 10,138 amid strong underlying demand across the country.
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