Watches of Switzerland lifts FY guidance on higher Q2 sales

(Sharecast News) - Watches of Switzerland lifted its full-year guidance on Tuesday driven by better-than-expected second quarter US and UK revenues which offset lower tourist and airport sales.
Revenue for the year to April 30 was now expected to be £880m - £910m, up from previous guidance of £840m - £860m.

Earnings before interest, tax, depreciation and amortisation (EBITDA) margin was forecast to rise 1% year on year, while the adjusted EBITDA margin was expected to increase 1.5% from previous guidance of flat.

Revenue in the first 10 weeks of the second quarter rose 18%, or by 20% in constant currency terms year on year to £202.7m. New product launches have also been stronger than anticipated with a positive influence on sales, the company said.

UK performance continued to be driven by strong domestic sales offsetting lower tourist and airport business; tourist and airport sales accounted for 9.2% of group sales in the second quarter to date, down from 32.5% a year earlier.

Regional stores continued to outperform London stores where footfall remains weak, the company said. Second quarter sales to date of £145.1m were 12.6% higher versus the prior year, while. UK ecommerce sales rose +49.9%

In the US, momentum has further accelerated "with an exceptionally strong and broad-based performance in the quarter to date". Sales there rose 43.4% to £57.7m on a constant currency basis.

"Our guidance for the balance of the fiscal year assumes that the positive trend experienced in Q2 will be moderated by the impact of pandemic related retail disruption in the UK and the US and uncertainty in the US economy, impacting mainly in Q3. We do not assume any improvement in recent trends regarding the travel or tourist sectors," said chief executive Brian Duffy.