(Alliance News) - Recently-floated Rolex watch seller Watches of Switzerland Group PLC on Tuesday reported a first-half revenue rise, on the back of favourable market conditions, and said it has agreed to buy four UK showrooms from jewellery retailer Fraser Hart Ltd.
Watches of Switzerland sells other luxury brands such as Cartier, Omega, TAG Heuer, and Breitling, and it joined the London Stock Exchange in June.
In the six months to October 27, revenue rose 17% to GBP428.7 million from GBP365.4 million last year.
The company wildly swung to a pretax loss of GBP9.0 million from last year's profit of GBP12.4 million. Though an adjusted basis, pretax profit more than doubled to GBP26.5 million from GBP12.5 million.
The company incurred GBP39.0 million in exceptional items, more than trebling from GBP12.8 million last year.
Watches of Switzerland parted with GBP21.7 million in "early redemption fees" in relation to the repayment of an outstanding principal of a listed bond of GBP247.9 million.
The company said: "Trading in the first half of financial year 2020 was positive and the markets for luxury watches remain robust in both the UK and US, as illustrated by demand in the first half generally exceeding supply. Profitability is improved due to good gross margin management and the leverage of showroom overheads."
Watches of Switzerland boosted its like-for-like sales guidance for the full-year to between 8.0% and 9.0% after initially guiding for mid-single digit growth. Like-for-like sales were up 10% in the first half.
Financial 2020 revenue is expected to be in line with market consensus of GBP877.5 million.
The company said it struck an agreement to buy four luxury watch and jewellery showrooms currently trading under the Fraser Hart brand for GBP31.7 million in total. The transaction is expected to close in January, Watches of Switzerland explained.
The units, located in Brent Cross, London, Kingston, in the greater London area, York, and Stafford, which is in England's West Midlands.
The showrooms had a combined annual revenue of GBP25.7 million and "four-wall" earnings before interest, taxes, depreciation and amortisation, which also does not include showrooms costs, of GBP5.0 million.
Chief Executive Brian Duffy said: "We have been admirers of the Fraser Hart operations for some years and see this acquisition as a good opportunity to complement our UK showroom network, and apply our best in class practices in merchandising, marketing, systems and retail operations. We look forward to welcoming the Fraser Hart colleagues of these showrooms into our Group and working with them into the future."
Shares in Watches of Switzerland were 0.3% higher at 324.80 pence each in London on Tuesday morning.
By Eric Cunha; ericcunha@alliancenews.com
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