Watches of Switzerland hails US "engine of growth" as sales surge

(Alliance News) - Watches of Switzerland Group PLC on Thursday said adjusted full-year earnings will be ahead of forecast amid a strong US performance and buoyant demand for its luxury products.

In response, shares in Watches of Switzerland jumped 15% to 609.00 pence in London on Thursday.

In a trading statement, the Leicester, England-based watch and jewellery retailer said revenue rose 11% to a record GBP1.83 billion in the 53 weeks to May 3, or by 13% at constant currency, driven by strong growth in the US.

Stripping out the 53rd week, group revenue was up 11% in constant currency and 8% reported, the firm added.

"The US continues to be the primary engine of growth, with revenue up 24% in constant currency to USD1.24 billion and now accounts for over half of group sales," said Chief Executive Brian Duffy.

The FTSE 250 retailer expects adjusted earnings before interest and tax of GBP152 million to GBP155 million for the financial year, ahead of prior guidance, and above the GBP148.4 million consensus cited by Jefferies.

Demand for key luxury brands, particularly products on Registration of Interest lists, remains strong, outstripping supply in both the US and UK markets, the firm said.

Luxury watch revenue grew 13% in constant currency and luxury jewellery revenue by 18% in constant currency.

UK revenue rose 5% with sequential improvement in the second half of the financial year.

Watches of Switzerland said it expects financial 2027 revenue growth of 5% to 10% at constant currency and adjusted Ebit margin expansion of 40 to 80 basis points.

"We enter financial 2027 with confidence and strong momentum, supported by the strength of our differentiated model, our leading market position, and the enduring demand across the luxury categories in which we operate," CEO Duffy added.

For financial 2027, the firm projects revenue growth of 5% to 10% at constant currency, adjusted Ebit margin expansion of 40 basis points to 80 bps, and capex of GBP60 million to GBP70 million.

The firm said it remains mindful of the geopolitical environment but has minimal direct exposure to the Middle East or tourist consumers.

By Jeremy Cutler, Alliance News reporter

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