Watches of Switzerland ups FY revenue guidance after strong H1

Watches of Switzerland upgraded its full-year sales guidance on Thursday after a stronger-than-expected first-half performance and solid start to the third quarter.

The company said it now expects revenue for the year of between £900m and £925m, up from previous guidance of £880m to £910m.

In the six months to 26 October, revenue dipped 3.4% to £414.3m as stores were trading at 59% of total potential hours due to lockdowns and disruption. However, the group swung to a statutory pre-tax profit of £36.2m from a loss of £9m in the same period a year ago, helped by strength in the ecommerce channel, which saw sales surge 65.4% over the half.

Watches of Switzerland said the third quarter so far has been positive, with a stronger-than-anticipated start despite the impact of national lockdowns in the UK and reduced international clientele and shopping centre traffic. In the seven weeks to 13 December, group revenue was up 11.9% at constant currency, or 11.2% on a reported basis.

The company also said it plans to pay back furlough support received from the government, subject to no significant disruptions affecting its performance in the remaining months of the full year.

Chief executive officer Brian Duffy said: "Despite significant headwinds throughout the period, we achieved a good sales performance with domestic customers offsetting lower tourist and airport sales in the UK, and elevated momentum in the US. The group's ambition, adaptability and technical strength were positively demonstrated through enhanced digital activity, a step up in online, increased marketing, CRM and click and collect. With positive cash management, we have further reduced debt and have a significant liquidity headroom."

Duffy said the company’s guidance assumes some further negative trading impact from potential lockdown measures in January and February next year.

"We have also taken into account the removal of tax-free shopping in the UK from 1 January 2021. We believe that the UK Government has misjudged the impact of removing tax-free shopping for tourists and we will continue to support all efforts to have this changed," he said.

At 0940 GMT, the shares were up 3.1% at 538.00p.