Luxury watch and jewellery retailer Watches of Switzerland Group has provided a positive update on its financial situation amidst the ongoing Covid-19 pandemic. The company has secured a new £45m ($56m) facility agreement as part of the UK government’s Coronavirus Large Business Interruption Loan Scheme, adding to its current available facilities of around £265m ($326m). While these figures offer some reassurance for the company, it is important to take into consideration the current state of its business and its performance over the past year.
In the fiscal year ending on 26 April 2020 (FY20), Watches of Switzerland Group reported a 5.9% increase in group revenue, reaching £819.3m. This surpassed the company’s recently revised guidance range. Prior to the lockdown measures imposed due to Covid-19, the company experienced strong trading, with group revenue rising by 15.8% in the first 46 weeks of the fiscal year. The UK market saw a 9.4% increase in revenue, while the US market witnessed an impressive surge of 36.4%. Luxury watch sales were a major contributor to this growth, with a 19.3% increase during this period. In fact, the demand for key luxury watch brands consistently exceeded supply throughout the year. However, with the closure of all UK and US stores due to Covid-19, the company experienced a slowdown in momentum during the final six weeks of FY20, significantly impacting the overall numbers for the fiscal year. UK sales for the 52-week period ending on 26 April increased by a mere 0.6% to £591.6m, while US sales rose by a healthy 22.9% to £227.7m. Nevertheless, this growth was significantly lower than the nearly 40% achieved prior to the pandemic. One positive outcome was the substantial growth in e-commerce sales, which rose by 45.8% in the six weeks leading up to 26 April.
CEO Brian Duffy emphasized that the company was on track to achieve double-digit sales growth before the lockdown. This was attributed to strong brand partnerships, favorable market conditions, and increasing momentum in the US market. Despite the challenging circumstances, the demand for luxury watches has remained strong, providing encouragement for the company. To enhance the online customer experience, Watches of Switzerland Group has expanded its range of available brands on its online platform, incorporating brands that were previously only sold in physical stores, thanks to its long-standing partnerships with prestigious Swiss watch brands.
Additionally, the company has identified cost savings and has been able to maintain full salary entitlements for all its employees. In preparation for store reopenings, Watches of Switzerland Group is working diligently to implement best practices and ensure a safe and healthy shopping environment for both customers and staff. Some store reopenings have already taken place in Florida and Georgia in the US, and the initial response from customers and employees has been positive. However, the company anticipates a prolonged period of reduced foot traffic, especially in airports, post-lockdown. As a result, it expects e-commerce, customer relationship management, and clienteling to continue playing a crucial role in driving sales. This is a challenge that many retailers in the industry will need to address in the coming months.
1. Coronavirus Support Finder – Official website providing information on government support available for businesses affected by the Covid-19 pandemic.
2. Watches of Switzerland Group – Official website of the Watches of Switzerland Group, offering luxury watches and jewellery.