The boss of Watches of Switzerland Group said they are continuing to open new branches to meet growing demand for expensive watches and jewellery.
The Leicester-headquartered group – which includes Goldsmiths and Mappin and Webb – has invested in 20 new showrooms across the UK, US and Europe over the last six months.
Strong growth in US sales in particular helped propel pre-tax profits to £83 million in the six months to the end of October – up more than a quarter on a year earlier.
That came from sales of £765 million for the half year, were up almost a third. Luxury watch sales accounted for £667 million of those revenues.
Sales from the group’s growing American network of stores were £311 million, 86 per cent up on the same six months last year. In the US the business recently opened six mono-brand boutiques and acquired a new showroom, anchored by Rolex, in New Jersey.
UK and European revenues of £454 million were supported by 10 new showrooms, including four mono-brand boutiques and a Watches of Switzerland multi-brand showroom at the new Battersea Power Station complex, in London.
The business now has 188 showrooms and is the UK's largest retailer for Rolex, OMEGA, Cartier, TAG Heuer and Breitling watches, and said average selling prices continue to rise.
A Rolex Air-King sells for £6,150 on the Watches of Switzerland website, while a Patek Philippe Grand Complication is available for £109,520.
Chief executive Brian Duffy said he was pleased with the strong performance, saying the business was benefiting from a growing share of the UK, European and US markets as big spenders continue to splash out on luxury items despite of the cost of living crisis.
He said: “We have an exciting and growing pipeline of new projects, and I am delighted to announce our third Watches of Switzerland multi-brand showroom in Manhattan at One Vanderbilt anchored by OMEGA and Cartier due to open in 2023.
“Trading in the holiday period so far has been in line with our expectations and our guidance for FY23 remains unchanged.
“We look ahead with confidence as we continue to deliver on our Long Range Plan objectives of maintaining our leadership position in the UK, becoming the clear leader in the US, and capitalising on the growth potential in Europe.”
Shares in the business were down 6 per cent today despite the positive outlook.
Russ Mould, investment director at online trading site AJ Bell, said there were still enough people with cash to splash out to keep Watches of Switzerland in healthy profit.
He said: “That might explain why demand remains very strong for luxury goods such as Rolex watches.
“Many people are on waiting lists for watches, such is the demand, and a lot of these won’t even put the product on their wrist once obtained.
“It’s about prestige – either displaying the watch in a cabinet at home or storing it safely in the hope that it appreciates in value.
“Often shelling out tens of thousands of pounds, watches are serious purchases and history suggests they can significantly rise in value.
“Watches of Switzerland is investing heavily for the future by opening new showrooms and expanding geographically as it can see big opportunities. This isn’t a one-off craze, investing in watches is a trend that’s been in motion for decades.
“Its latest results show a business in perfectly decent health. Prices and volumes are up, and management has reiterated 2023 guidance which is becoming a rarity in a world where earnings forecasts are being downgraded across multiple industry sectors.
“The market focus remains short term, however, and investors have given the thumbs-down to the results. There’s been a slight dip in margins and a big drop in cash flow.
“The latter can partly be explained by having a big working capital outflow versus an inflow a year earlier.
“The company has increased its inventories, partially down to opening new showrooms. But unlike many retailers, Watches of Switzerland is not worried about being left with surplus stock. It is confident these watches will be shifted in no time at all.”
