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Watches of Switzerland reports record year as luxury shoppers bought online and from regional shops after Covid-19 pandemic

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How did luxury shoppers buy during and after the Covid-19 pandemic and lockdowns in the UK and US? Watches of Switzerland had some answers today as it reported a leap in online sales and said that shoppers bought more from its regional shops and less in London as tourism fell. 

The retailer introduced a range of digital activities including automated remote selling, digital campaigns and product launches, while also hosting virtual events and PR launches and improving its engagement via social and digital media. 

Brian Duffy, chief executive of Watches of Switzerland, said he was delighted with the retailer’s first year as a public company. He said the retailer had delivered a strong performance for the first 46 weeks of the year and then adapted quickly to the challenges of Covid-19. 

“While we began FY21 with our global store portfolio closed due to the pandemic, we were well prepared for the reopening of our stores during Q1 and trading has exceeded our expectations in both the UK and the US,” said Duffy.

 “The UK has been driven by continued strong ecommerce sales and domestic demand in regional stores, partly offsetting greater declines in London (due to reduced tourism) and our airport stores. The US continued to gain momentum during the period with all re-opened stores performing strongly versus the prior year. This continued strong performance is testament to our long-standing brand partnerships, focus on exceptional customer experience, well-established multichannel leadership and the strong fundamentals of the luxury watch category in our markets, where demand continues to exceed supply.”

Full-year figures

The update came as the retailer, ranked Top500 in RXUK Top500 research, today reported revenue of £810.5m in the year to April 26 2020, a rise of 4.8% compared to the previous year. Pre-tax profits from continuing operations came in at £1.5m. Watches of Switzerland said that in the 46 weeks before lockdown, group revenue was ahead by 15.8%, with business strong in the UK (+9.4%) and still stronger in the US (+36.4%), thanks in particularly to strong luxury watch sales (+19.3%). In the final six weeks of the year, all of its UK and US stores closed as a result of Covid-19 lockdowns. During that period, UK sales rose by 0.6% and US sales by 22.9%. 

In the 13 weeks to July 26 2020, revenues were ahead of expectations, rising in both June and July compared to last year. Across the whole of the first quarter, sales were down by 27.6% to £151.6m as shops were at first closed and then traded for only about 38% of the hours they would otherwise have traded during the quarter. Sales were most strongly hit in May (-83% YOY) but started to recover in June (+0.4%) and July (+7.4%). Online sales were 79.3% ahead of last year, with luxury watch sales accounting for 86.8% of group revenue. UK sales were 30% down on last time and US sales were 21% down. 

The retailer expanded its store estate both during its full-year – when it bought four Fraser Hart shops and opened five new shops – and during the first quarter, when it opened five new mono-brand shops, for watchmakers Rolex, Tag Heuer, and Seiko. It also renegotiated its airport store contracts, extending those terms to the end of its 2021 full-year, in the light of reduced traffic expectations.

During the current year, it now expects revenues to increase to between £840m and £860m, but that profits will stay flat compared to last year. The forecast is made with the assumptions that there will be no further national lockdowns in either of its markets, and with the expectation that airport traffic and foreign tourism will improve slowly in the UK, as will domestic tourism in the US. 

As of July 26, it had £91.2m in net debt, with headroom of £161.1m. 

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