- Watches from Switzerland Group were the biggest gainers on the FTSE 100 Index on Tuesday
- The retailer aims to exceed £3 billion in sales by the end of its 2028 financial year
- The London company’s turnover recovered modestly in the second quarter
Watches from Switzerland Group shares jumped on Tuesday after the company unveiled proposals to more than double sales and profits over the next five years.
Shares in the luxury retailer, which sells iconic timepiece brands such as Rolex, Breitling and Tag Heuer, rose 13 per cent to 586.5p just before markets closed, making it the highest gainer in the FTSE 100 Index.
As part of its ‘long-term plan’, the company aims to exceed £3 billion in sales by expanding its retail footprint and selling more branded jewelery and used watches.
Luxury: Watches of Switzerland Group sells iconic timepiece brands such as Rolex
Britain and the US are central to this strategy, with the company targeting average annual sales growth of 8 to 10 percent in the former market and up to 25 percent in the latter.
To achieve this, the London-based company plans to invest between £350 million and £500 million, including in new retail projects and further targeted acquisitions.
Despite the global economic slowdown, the luxury goods industry is predicted to continue to grow, led by regions such as Asia and the Middle East.
Management consultancy Bain & Company According to estimates, the market will be valued at 570 billion euros by 2030doubled its value at the beginning of this decade.
Brian Duffy, CEO of Watches of Switzerland, said the group’s plan would “take advantage of our leading market positions and the unique growth opportunities available to us as the world’s largest retailer of luxury watches.”
Watches of Switzerland published the strategy alongside a trading update showing a modest recovery in sales in the second quarter.
In the thirteen weeks ending October 29, the company’s total sales rose 5 percent on a constant exchange rate basis to £379 million, thanks to an 88 percent increase in second-hand orders.
Business was further boosted by higher average selling prices and solid demand for luxury watches in the US, where the group opened seven outlets, including three in Utah and New Orleans.
This offset declining sales in the UK and Europe, where the company recently temporarily closed some high-turnover Goldsmiths and Mappin & Webb showrooms for refurbishment.
However, following the weak performance in the first quarter, half-year revenue fell to £761m as jewelery demand was impacted by weak consumer confidence and a shift to full-price sales in the US.
Brian Duffy has previously attributed the decline in jewelery purchases to the Covid-19 pandemic, which has seen fewer people getting engaged and married.
Still, the company has maintained its full-year guidance, with revenue expected to rise to between £1.65 billion and £1.7 billion and the core profit margin adjusted to be in line with the previous financial year.
Russ Mould, investment director at AJ Bell, said: ‘The company is certainly ambitious and having a clear plan for how it will grow should help calm investors concerned it could be left behind.
“That said, it’s one thing to have a plan; executing it successfully is another. The company has now set a new benchmark, and failure to meet expectations will not be well received.”