Brits splashing on Rolexes boost Swiss Watches

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With global travel still frozen and high-end leisure spending in the doldrums, wealthy consumers turned to luxury watches, boosting the Swiss watch retailer.

Shares of the group jumped 20% on Thursday after reporting that increased demand from well-heeled UK consumers had partly offset the lack of tourists passing through central London and major airports.

Group sales rose 4.8 percent to £ 811million in the year ending April 26, despite many stores in the UK and US closing for the latter part of this year. Since the stores reopened, the company said trading has exceeded management expectations in the UK and US.

“The British public have always loved their watches,” said Brian Duffy, Managing Director. “There has been some build-up of wealth and savings over the period, as people haven’t been able to spend on other things, and people appreciate these watches and what they stand for. .

Group sales in the first quarter were still down by more than a quarter due to store closings, but were up 7.4% in July. Watches of Switzerland forecast annual sales of between £ 840 million and £ 860million, and said underlying profit margins will remain stable.

In the first quarter, sales to domestic customers, mainly through Goldsmiths and Mappin & Webb chains, reached almost 70 percent of the UK total, up from two-fifths a year earlier, while airport sales and tourists fell to less than 5 percent. a third.

The shortage of tourists means that the company “was able to supply more products to the [regional] boutiques, ”said Duffy, adding that there were still long waiting lists for particularly coveted brands, such as Rolex, Patek Philippe and Audemars Piguet.

Watches of Switzerland has 135 stores in the UK and US, which also sell Cartier, Omega, TAG Heuer and Breitling brands.

In the United States, where the group operates in Nevada, Georgia, Florida and New York, sales recovered more rapidly than in the United Kingdom. “We reopened in late May in Atlanta and Florida and traffic has improved,” said Duffy. “People there are easier to go back to the stores.”

July sales in the United States increased 27 percent, compared to an increase of 1.1 percent in the United Kingdom.

Like many other retailers, Montres de Suisse reported a sharp increase in online sales and said that while footfall was generally lower, spending was higher.

He warned that once demand from tourists and airport travelers recovers, the company would be less able to meet demand from regional stores, but added that he did not believe that deep recessions and higher unemployment in the UK and US would hurt sales.

“Demand always exceeds supply, so even if there is some drop in demand, there will still be enough people interested in buying. . . sales reflect our ability to meet that demand, not create it, ”said Duffy.

Pre-tax profit was £ 1.5million, down from £ 20.1million last year, although the reduction was mainly due to one-time charges for prepaying a loan .

Barclays analysts said the outlook statement was “extremely encouraging” and noted the new income forecast was well above their own annual estimate of £ 814million. They forecast adjusted pre-tax profit of £ 54million for the year ending April 2021, up from £ 49million for the year just ended.

By mid-afternoon on Thursday, shares of FTSE 250 group were up 20% to 314p. They floated in May of last year at 270p. Private equity group Apollo retains a 42% stake, having acquired the company in 2012.

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