Watches of Switzerland Group H2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
July 3, 2025

Key Takeaways

  • Positive Sentiment: Record sales of £1.65 billion (+8% cc) and adjusted EBIT of £150 million (+12% cc) drove a 30 bps margin uplift in FY25.
  • Positive Sentiment: The US division surpassed $1 billion in sales and delivered a 24.7% CAGR since FY20, comfortably outpacing the 14% market growth.
  • Positive Sentiment: Continued investment in 15 new showrooms—including a London Rolex flagship—and the acquisitions of Roberto Coin and Hodinki bolstered luxury and pre-owned offerings.
  • Neutral Sentiment: FY26 guidance targets 6–10% constant-currency revenue growth but anticipates flat to –100 bps adjusted EBIT margin amid US tariff uncertainty.
  • Neutral Sentiment: Relaunched e-commerce on Shopify, expanded branded jewelry initiatives, and maintained strong ESG ratings alongside disciplined capital deployment.
AI Generated. May Contain Errors.
Earnings Conference Call
Watches of Switzerland Group H2 2025
00:00 / 00:00

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Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

So good morning, and thank you for joining our presentation of the final results of the Watch of the Switzerland group for fiscal year twenty five. You'll be hearing firstly from me, Brian Duffy, CEO of the group, then David Hurley, president of North America and deputy group CEO, then Craig Bolton, president UK, and finally, last but not least, Anders Romberg, our group CFO. I'll then have some closing remarks before opening the lines for your questions. In fiscal year twenty five, we achieved record sales of 1,652,000,000.000. That was plus 8% in constant currency versus prior year, and we had a stronger second half gross achieving plus 12%.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Our US division passed an important milestone, achieving sales of over $1,000,000,000 in the fiscal year. Adjusted EBIT of 150,000,000 was 12% ahead of last year, representing an improvement in profitability of, 30 bps, and we ended with a decent balance sheet. Throughout the year, we continued with our strategy of investing for profitable growth, through developing our showrooms with new points of sale for Rolex in the in The US in Jacksonville and Plano, Texas, the stunning new Rolex flagship boutique here in London and Old Bond Street, expansion of Patek Philippe in Greenwich, Connecticut, and all in all, a total of 15 showroom projects for the group. And we have an exciting program of investment projects in fiscal year twenty six and twenty seven that you'll see from David and Craig's presentations. We're delighted with the acquisitions of Roberto Coyne Inc.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

And Haddinke. Indications are going very well, and we've great prospects for those two businesses. Pre owned, Rolex CPO program and other brand CPO have performed very well, exceeding our expectations. As we have presented previously, we see significant growth potential in the luxury branded jewelry sector, particularly through Roberto Coin, but also with other luxury jewelry brands. We have relaunched our US websites through Shopify.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Watches of Switzerland is up and running and performing very well, and Roberto Coin and Mayers will go live in the coming weeks. We see really big opportunity in the online space in The US. The luxury watch market is unique and characterized by demand exceeding supply overall, long term price inflation due to high value commodity materials and Swiss franc denominated production costs, strict management of brand image and distribution, and a relentless focus from the brands on product quality and innovation. Following many years of low growth and underinvestment, The US market started to outpace other markets from 2019 and achieved an impressive compounded average growth rate from calendar two thousand nineteen through to '24 of plus 14% annually. This compares to our US CAGR growth of 24.7% from fiscal year twenty to fiscal year twenty five, largely overlapping the same period.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

The US is now the clear number one market globally. The UK market, in fact, is the number one market on a domestic per capita basis and has shown consistent long term growth over many, many years. The UK market has grown at a compounded average growth rate of 5.1% from calendar nineteen through '24. We have outperformed the market growth over this period with a rate of 8.1% fiscal year twenty to fiscal year twenty five. The chart on the right shows the comparison for The US, UK, and global markets in the year to April 25 compared to '24, '23, and '22.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Compared to '22, The US market in the year to April 25 has increased by an impressive 51% and The UK in the same period by 20%. Both markets outpacing the global market, which was impacted by declines in the Asian markets of Hong Kong and China. Watches and Wonders 2025 where the brands present their new developments and marketing plans was excellent this year, as are the new products and plans presented by other brands who did not participate in the firm. We now have a new product family from Rolex, the Landweller, and more new novelties from Patek Philippe. A refocus on icons from the major brands was great to see and a clear response from most brands to the trend in both men's and women's watches of smaller case sizes.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

The importance of value has clearly been recognized, and there are some great marketing plans for the coming year, all very, very positive. We like Certify pre owned and Certify pre owned of other brands continues to perform very well exceeding our initial expectations. This chart shows the march of the luxury jewelry market towards branded product from unbranded product, which is the basis of our strategic focus on branded jewelry within particular Roberto Coin and also other brands. Our model is working and is uniquely advantaged. We have scale, full in house functional resources, and the financial resources to support our commitments and growth plans.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

We have strong, very long standing relationships with our brand partners. We are now diversified geographically and in complementary product categories of luxury watches, luxury jewelry, pre owned watches, after sales and servicing, and also now media with Haddinki. We are multi brand, multifascia, multichannel, and international. We are one of the largest and oldest players in our category with an extensive retail experience and a focus on client service. As presented earlier, the luxury watch market is strong, resilient, and offers long term consistent growth.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Recent years impacted by the global pandemic resulted in a period of unprecedented volatility. The impact of the COVID years, was a reduction in production up to 25% due to lockdown in Switzerland and an increase in demand as consumers had the disposable income and the time and inclination to shop for watches and jewelry. For a luxury watch category, this led to an increased disparity of supply and demand resulting in a dramatic spike in secondary market prices and an excess of demand for new product. These excesses were corrected in 2324 period when demand normalized, although demand was further impacted by high price increases in 02/2023, which impacted The UK market significantly. The US market was less impacted by price increases and has remained pretty strong throughout as presented earlier.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Where we are now, we believe, that brands have responded to the conditions with more modest pricing and a focus on new commercial product development and impactful marketing. Secondary market prices have now stabilized overall and above pre COVID levels, with some key brands showing some price increases in recent months. In our experience, The UK market has stabilized in line with pre COVID growth trends, and The US continues to be strong and outperforming other geographies. We will come on to talk about US tariffs later in the presentation. If you look at our group's performance over this volatile period, we have delivered a sales CAGR of plus 13 and a half percent fiscal year twenty five on '19 and an adjusted EBIT CAGR for this period of 19.3%.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

We've achieved this performance by sticking with our model and optimizing our core business and adapting to new opportunities as pre owned and branded jewelry. In terms of my key messages, we've made good financial progress and significant strategic progress. We've successfully navigated a period of unprecedented volatility. The markets we are in remain attractive. Our unique borrow positions us well for sustained profitable growth and market performance.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

We are pleased with our financial performance and also with our continued support and engagement with our responsibilities in ESG. We were proud that thanks to our great colleagues in The UK and US, we were accredited a great place to work this year. We are number seven in the FTSE two fifty for female leadership. We are rated triple a by MSCI on ESG. And since its inception in 02/2021, I'm proud to say that we have now committed £8,300,000 to our foundation and through which we support causes in The UK and US focusing on education and alleviating the effects of poverty.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

I'll now hand over to David, the president of North America and deputy CEO.

David Hurley
David Hurley
EVP & President at Watches of Switzerland Group

Thank you, Brian. We're delighted with our continued growth in North America, having gone from no presence to $1,000,000,000 in sales in a little over seven years. This has been driven by continuous investments in talent, technology, evidenced by our e commerce launch, investments in our showroom portfolio and acquisitions. The U. S.

David Hurley
David Hurley
EVP & President at Watches of Switzerland Group

Now makes up 48% of our group and we see lots of opportunities for future growth in this fragmented market. This year, we've completed a number of significant showroom projects with key partners, particularly Rolex. These include the relocation of Mayors Tampa, Florida to a much larger space. The expansion of our recently acquired Betteridge Vale showroom, relocations of Mayors Jacksonville and Watches of Switzerland, Plano, Texas, where Rolex was introduced into the brand lineup, and the conversion of our Mayors Lennox Atlanta showroom into a Rolex boutique. In terms of showroom investments, we still see significant opportunities to grow revenue through renovations, expansions, showroom relocations, and new agencies.

David Hurley
David Hurley
EVP & President at Watches of Switzerland Group

We have a strong pipeline of projects through FY '26 and '27, which will complete the rightsizing of our existing estate. We're delighted with our new Patek Philippe Salon in Betteridge, Greenwich. We are finalizing the plans for the rest of the Betteridge showroom and will begin this major refurbishment during FY '26. Watches of Switzerland Ross Park in Pittsburgh is an example of a new showroom we have opened that is anchored by Cartier and Omega. Both of these brands are performing strongly across our showroom network and also online.

David Hurley
David Hurley
EVP & President at Watches of Switzerland Group

One year in and we're even more excited by the potential of Roberto Coin than we were at the time of the acquisition. Roberto Coin has been performing well and we're pleased to have retained an intact retail distribution network. Brian and I were in Las Vegas at the JCK Couture Show, and it was great to see the fantastic reactions to our product launches from our retail partners. We're working on a number of significant growth opportunities for this brand in the North American market. These include a focus on brand range, development and merchandising, ensuring the retail network has the right range and depth of key collections.

David Hurley
David Hurley
EVP & President at Watches of Switzerland Group

We recently launched a marketing campaign with Dakota Johnson as global brand ambassador. This campaign is being received really positively by the press and our retail partners and will help to elevate the brand's prominence. We've developed a new in store design and shop in shop concept that we've trialed in our mirror showrooms. We've seen a significant uplift in sales from this, and there's an opportunity to expand this through the wholesale network. We are also working closely with our department store partners and independent retailers on space expansion opportunities and pursuing mono brand boutiques.

David Hurley
David Hurley
EVP & President at Watches of Switzerland Group

During FY '26, we will also launch a new upgraded website to boost online sales. I'm pleased to share that we will we are progressing with three mono brand Roberto coin boutiques in Hudson Yards, New York, Miami Design District and Caesars Las Vegas, which will be run through a DTC model. Roberto Coin has had phenomenal success with mono brand boutiques in Europe and The Middle East. We are excited about the elevation that these boutiques will bring to the brand in The US. Hedinke is going from strength to strength.

David Hurley
David Hurley
EVP & President at Watches of Switzerland Group

They've just had the most successful Watch and Wonders, and we are also very excited about what we have coming down the line over the next eighteen months. Again, similar to Roberto Coyne, we knew how influential, loved and respected Haddincki was, but we are still very pleased by the support we are seeing from the watch brands and most importantly, the wider watch community. And finally, we are continuing to develop our e commerce business. We've recently re platformed our watchesaswitzerland.com website onto Shopify, and there will be a migration of all of our other websites onto that platform. Very early performance is proving positive.

David Hurley
David Hurley
EVP & President at Watches of Switzerland Group

We see e commerce in The US as a significant opportunity for growth. I will now hand you over to Craig, President for The UK.

Craig Bolton
Craig Bolton
President - UK & Europe at Watches of Switzerland Group

Thanks, David. I would like to focus on the significant showroom development we have been delivering here in The UK across FY '25 and plans for FY '26 and beyond. Let's start with the most significant project completed this year. I am extremely pleased to announce we completed the development of the new Rolex boutique on Old Bond Street, London, opening on Friday March 2025. This boutique is the single Rolex agency on Bond Street, from what was previously four points of sale.

Craig Bolton
Craig Bolton
President - UK & Europe at Watches of Switzerland Group

Operating across four floors in circa 7200 square feet, including the first dedicated Rolex certified pre owned floor, as well as three floors dedicated to sales and hospitality, and an after sales lounge home to six watchmakers and technicians. Let's take a look at this short video. So as you can see, it's an amazing boutique. The performance of this Rolex boutique has exceeded all expectations. We have received over 15,600 visitors in just the thirteen weeks since opening.

Craig Bolton
Craig Bolton
President - UK & Europe at Watches of Switzerland Group

Having built an amazing team for our boutique, we engaged some months ago with Antonia Hock, an international client experience expert to help us with our team training and delivery of a world class client experience unique to Old Bond Street. I am extremely pleased with our results so far in terms of Net Promoter Score and direct client feedback, particularly relating to the colleague satisfaction. We have continued the rollout of our luxury designs across a number of key locations in FY25, FY25, with significant new developments and expansions for Mappen And Webb Edinburgh, Goldsmiths, Milton Keynes and Cheltenham, as well as Watches of Switzerland Oxford Street. In November 2024 we expanded and more than doubled the size of our location in Fenchurch Street London, converting the showroom to a new Watches of Switzerland. Across two floors and nearly 6,000 square feet, the showroom incorporates a large Rolex area along with multiple branded spaces for key luxury brands, as well as the first branded Rolex certified pre owned space.

Craig Bolton
Craig Bolton
President - UK & Europe at Watches of Switzerland Group

As we move into FY '26, our first significant project was the completion of our joint venture with Audemars Piguet. Their AP house in King Street Manchester, the only point of sale in The UK for Audemars Piguet outside of London. Across six and a half thousand square feet, the grade two listed house has been designed with the highest level of client experience in mind, offering dining facilities, VIP space, music lounge, and rooftop event and space. The client feedback in the early weeks has exceeded our expectations. Newcastle bone and bred makes me very happy to be completing such a major refurbishment and upgrade to our amazing and beautiful Northern Goldsmith showroom.

Craig Bolton
Craig Bolton
President - UK & Europe at Watches of Switzerland Group

The showroom is renowned for being The UK's first ever Rolex retailer back in 1919, and Rolex along with Rolex certified pre owned will feature heavily in this development, along with our amazing precious jewellery and luxury jewellery brands. This project completes July 2025. We are making great progress developing a first of its kind mapping and web luxury jewellery boutique in St Anne's Square Manchester. This grade two listed building in the heart of luxury retailing in the city will be home to the most amazing selection of luxury jewelry brands, created across five and a half thousand square feet of branded spaces with hospitality and bespoke event and space. It will also include the first De Beers monobrand boutique outside of London.

Craig Bolton
Craig Bolton
President - UK & Europe at Watches of Switzerland Group

All of the brands in the showroom will be exclusive to MAP and Web in Manchester, giving us a real point of difference for our clients. The showroom is scheduled to open in September 2025. The remainder of FY 'twenty six will see us complete a number of major refurbishments, expansions and relocations in key regional locations, majority completing in the first half of FY twenty six. This pipeline of amazing projects continues into FY twenty seven. We have agreement from Rolex to double the size of our Rolex boutique on Buchanan Street, Glasgow.

Craig Bolton
Craig Bolton
President - UK & Europe at Watches of Switzerland Group

This hugely successful showroom has traded beyond expectations since opening in 2019, and now requires this expansion to allow us to service an increased number of clients, as well as introduce Rolex certified pre owned in a dedicated space. And also to create a quality after sales area with in house watchmakers. This project will commence in October 2025. Many thanks. I will now hand over to Anders, our CFO, to discuss the financials.

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

Thank you, Craig. Before we get into the numbers, I wanted to take a moment to provide an overview of the Group's financial framework for value creation. We operate in a market with attractive long term structural growth dynamics, where demand continues to outstrip supply for key brands. As Brian and David talked to earlier, we have a strong track record of revenue growth, recording a CAGR of 13.5% since IPO, while growing our U. S.

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

Business to over $1,000,000,000 a standing start in 2017. And we believe our key growth drivers will see this strong momentum continue. Likewise, our margin progression has been strong with a CAGR of 19.3% since IPO. Our balance sheet is strong supported by good cash flow conversion. The group has a disciplined approach to capital allocation, focusing on organic and inorganic growth with surplus capital return to shareholders.

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

I will talk in more detail about our capital allocation approach later. Finally, we offer our shareholders long term compounding returns. On to the numbers. FY 2025 was a year of stabilization and a return to growth in The UK, while momentum in our U. S.

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

Business continued to be strong. Sales came in at £1,652,000,000 or plus 8% in constant currency. Sales growth was driven by The U. S. Market with growth of 16% in constant currency despite the impact of the Q1 stock build.

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

Our adjusted EBIT of 150,000,000 versus 135,000,000 in FY24 was up 12% in constant currency with an adjusted EBIT margin of 9.1% or up 30 basis points versus prior year. Our free cash flow was SEK98 million and return on capital employed was 19%. If we split the year in two halves, you can see the improving sales trend with The UK returning to growth and The US business up 19% in the second half versus the SEK11 million in the first half. Turning to the income statement in more detail, as mentioned group revenue at plus 8% in constant currency or plus 7% at reported rate. Net product margin percentage declined by 30 basis points due to product mix, partially offset by savings on interest free credit.

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

Our adjusted EBIT margin grew by 30 basis points to 9.1% and adjusted EBIT for FY 2025 came in at SEK150 million, up 12% in constant currency. Adjusted EPS came in at 41.6 or up 9% on prior year. Our balance sheet is strong. In the year we spent £107,000,000 on the acquisitions of Roberto Coin Inc. And the Hodinki business, both of which are progressing well.

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

Continued capital investment in our estate to elevate the network and drive future growth remains a key component of our strategy. Inventory levels were up 14%, reflecting inventory on acquisitions of CHF54 million. Underlying inventory levels and turns remained healthy. As a reminder, inventory is a very low risk asset in our category. We closed the year with a net debt position of £96,000,000 reflecting acquisition spend.

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

Our net debt to EBITDA leverage came out to 0.6 times. We continue to be highly cash generative. Our free cash flow for the year was 98,000,000 with a cash flow conversion of 51. This was impacted by one off changes to supplier payment terms, which if excluded would have given a cash conversion of 71%. In March, we announced the launch of this GBP 25,000,000 share buyback program was completed in early FY twenty twenty six.

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

We spent 11,000,000 during FY 2025. As mentioned earlier, we have a disciplined approach to capital allocation. Our focus is on showroom investments, strategic acquisitions and in the event of surplus capital returns to shareholders. Showroom investment remain a key priority, offering attractive returns and our ongoing elevation program is progressing well as evidenced earlier by David and Craig. We have a disciplined approach to strategic acquisitions with strong focus on returns.

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

This remains one of our key pillars for growth, particularly in The US. And were we to have surplus capital above and beyond the requirements of the business, we will return to shareholders as evidenced by the recent share buyback program. Across the piece, we look to optimize capital deployment for the benefit of all of our stakeholders, focusing on long term sustainable growth, while maintaining financial and operational flexibility, us to react tactically to opportunities. The current macroeconomic environment is volatile, making it uncertain. Our guidance for the fifty three weeks of FY 2026 is based on current U.

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

S. Tariff rate of 10% maintained beyond the ninety days pause. Currently announced margin changes from brand partners in response to the ten percent tariff. As it stands today, the 10% tariffs on imported goods from Switzerland has led some of our brand partners putting through mid single digit price increases in The U. S.

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

Alongside reducing their authorized distribution networks margin percentage. Our view is that some brands are looking to share the tariff pain with retailers rather than passing the full cost on to the consumers. Our guidance is based on visibility of supply of key brands, which we have for the calendar year 2025. Guidance also reflects confirmed showroom projects, but excludes any uncommitted capital projects or acquisitions. So we're guiding towards revenue growth in constant currency of between 610%.

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

Adjusted EBIT margin percentage flat to down 100 basis points on prior year, reflecting margin changes from key brand partners. Our capital expenditure is planned to come in between SEK65 million and SEK75 million. The outcome of U. S. Tariff developments remains uncertain.

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

We are in regular dialogue with our brand partners, but it's too early to comment on the potential sector impact of further changes. We will provide further updates as to the potential impact on FY 2026 guidance once the situation becomes clear. With that, I will now hand over to Brian for some final remarks.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

So thank you, David, Craig and Anders. And to summarize, the group has performed well during the year with significant strategic progress. We've continued to invest in our showroom estate and have a strong pipeline of projects through fiscal twenty six and '27 with our key partners. The performance of certified pre owned has been encouraging, and we have major growth opportunities for e com in The US and luxury branded jewelry. The integrations of Roberto Coyne and Haddinki have gone well, and we have initiated a number of significant growth initiatives with these acquisitions.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Importantly, we've continued to support the Watches of Switzerland Group Foundation, which provides essential support to local and national charities focused on poverty, social mobility, hardship, and education. We have a uniquely advantaged model with, attractive strategic opportunities, and we are very well placed to continue to deliver profitable growth.

Operator

Thank you. We will now begin a question and answer session. Our first question is from Adrian DuVerge from Goldman Sachs. Please go ahead.

Adrien Duverger
Adrien Duverger
Equity Research Associate at Goldman Sachs

Hi, good morning. Thank you very much for taking my questions. So the first one would be on The U. S. Market, please.

Adrien Duverger
Adrien Duverger
Equity Research Associate at Goldman Sachs

Could you comment on what surprised you the most regarding the performance in The U. S. Over the last six months? And could you also comment on the exit rate and what you've been seeing in the last couple of months? The second question would be with regards to the inventory.

Adrien Duverger
Adrien Duverger
Equity Research Associate at Goldman Sachs

So given the numbers we've seen for SwissWatch exports coming into The U. S. In April, could you please comment on where you see inventory in The U. S? And more broadly, how do you feel about the outlook for inventory allocation across the brands?

Adrien Duverger
Adrien Duverger
Equity Research Associate at Goldman Sachs

Is it in line with your expectations looking ahead for full year '26? Thank you very much.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Okay. Thanks. Thanks for your question. You know, I wouldn't say that there was too much surprising about The US market. Know, I think original thesis that there was a great love of Swiss watches and that demand was being not fully potentialized because of an underinvestment in retail.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

I think that's clearly been proven to be correct. Passing a billion dollars last year was a, I think, a real exceptional milestone for the for the group there. So we've you know, it's across The US. Their performance has has been good. So I was, like, the appreciation and love for their luxury watches.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

There's a fantastic market in The US for luxury branded jewelry, which has also been very strong. And those wealth, those are not achieved in America that people, you know, continue to enjoy life and indulge in the sport and to open up, you know, great client service and great environments and obviously representing the best brands in the market. So honestly, nothing that we would really characterize as surprising. We've got to keep working hard on it. Of course, do.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

We keep investing. We keep training with our people. We keep elevating client experience and the consumer responding very well. We did finish the year strongly. We've got really important initiatives that are going to be impacting in the year ahead, including the launch of ecom.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Although revised the ecom launch, which is off to a great start, very, very positive about the capital coin and the potential that's there. And you heard from David, you know, important steps that we've taken with modern brand stores,ecom, and obviously this fantastic reaction we've had to upgrade the Johnson campaign. Very positive about that. Pre owned was a much well established market in The U. And we've clearly managed to take a strong position in that.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

And we've got great momentum on Rolex CPO and another pre owned. So we are very happy with our progress and and happy that we we understand that market and how to respond to it. Inventory, Randall?

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

As for the inventory, Adrian, obviously, April was inflated because what the brands did, they they accelerated intake to the market in expectation of tariffs. So it's not something that's hit the distribution network. It's more held by the brands themselves. If you look at The US market from an inventory point of view, it's very healthy.

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

The growth in the market over the LTM period is 15.5%. So I think it's more relevant to look at it over an extended period of time than taking an isolated month. It is also important to recall that it's not these import numbers have nothing to do with what the inventory levels in the distribution network itself is. So there is no excess inventory in the market. No.

Adrien Duverger
Adrien Duverger
Equity Research Associate at Goldman Sachs

That's very clear. Thank you. And if I can just have a follow-up on growth in The U. S. Could you please comment on the growth in The U. S. Ex Roboto coin?

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Actually, it's not a number that we've given out, so we can't be specific on that. But as I mentioned, we have a number of growth initiatives. We know where we are on supply, obviously, from from key brands, and that's that's played into a to an expectation. We have both clients and the capital coin, but we also focus also around ecom. I think the important projects, those that we completed towards the end of the second half of the last fiscal year and others that we have planned going into into this year.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

You know, the the uncertainty in the market remains tariffs, of course, which should be made really clear. We'll have, hopefully, clarification on that in the in coming days, really, hopefully, next week. But we have a we have a number of course initiatives regarding as as an important one, but we have we have a lot of important ones as well.

Adrien Duverger
Adrien Duverger
Equity Research Associate at Goldman Sachs

Thank you very much. You're welcome.

Operator

And our next question is from John Cox from Kepler Cheuvreux. Please go ahead.

Jon Cox
Head of Swiss Equities & European Consumer Equities at Kepler Cheuvreux

Yeah. Good morning, guys. Sorry, Brian. The your answer there on The US, I couldn't I couldn't really catch it at the at the start. I think there's a problem with the the microphones there.

Jon Cox
Head of Swiss Equities & European Consumer Equities at Kepler Cheuvreux

So you exited or more recent trading in The US is improving. Is that what you said? And I'd like to ask the same question about The UK. Just trying to get a feel for the overall market. Is it the same as it was a couple of months ago or or things are improving or, deteriorating, you think, a on an underlying, basis?

Jon Cox
Head of Swiss Equities & European Consumer Equities at Kepler Cheuvreux

Second question, just in terms of the shop closures you announced in The UK, just wondering what are your efforts there? Is it obviously to improve profitability? Just wondering in terms of the negative impact on revenue, you know, I guess those stores are pretty low, low, low, you know, single digit million contributors at best in terms of revenue. Thank you.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Sorry. Leanne, can you hear me okay now?

Jon Cox
Head of Swiss Equities & European Consumer Equities at Kepler Cheuvreux

Yeah. It's it's not great. It's like you're you're talking into a tunnel or something.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Okay. We've we've moved the night Mike a bit closer.

Jon Cox
Head of Swiss Equities & European Consumer Equities at Kepler Cheuvreux

That's that's yeah. That's much better. Yeah.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Okay. Right. So sorry you didn't hear me or you're messing up. I didn't see anything of of improving. We did have a good second half, both UK and US as as we've reported.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

So our only comment on current trading is it's in line with our expectation. Nothing to report on it. Good momentum, mechanic good momentum out of last year, and that continues so far in this year. We have a lot of growth initiative in The US, helped, I may say, all of that, around jewelry, set of ipownedecom and a lot of great projects that we completed last year impacting in this year and then other new projects that we have planned that David reported. So so all good, and and we've described The UK market as having stabilized following a period of really unprecedented volatility, really impacted the post COVID period and then impacted by resulting, you know, high inflationary prices impacting at a time when UK consumer sentiment was pretty negative.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

So we have we had the market overall, and we within that market had a tougher period, second half twenty three through to '24. We see that it's largely over the market, the consumer behaving in a way that we recognize and our brand partners in particular responding as they typically do to the market conditions, really great product development, modest price increases, and great marketing to support the new products that are going on. Stabilize is how we see The UK market, that's how we've projected it going forward. The closures that we did, well, know, as you described, there's very little loss of sales actually. The agencies at the and those stores that that we want to maintain, we have maintained, and we've moved into other stores in the local geographies.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

So overall, you know, as a cost saving for the year that we'll have from the store closures and no real significant impact on sales.

Jon Cox
Head of Swiss Equities & European Consumer Equities at Kepler Cheuvreux

Okay, I want to just follow-up in terms of your non supply constrained brands. Just wondering how the environment is for those or anyone's, you know, maybe doing particularly well, maybe others for whatever reason not doing particularly well. And just in terms of your guidance, you know, what are your thoughts about you know, will will there be a decline? Is that what you're forecasting for those non, supply constrained brands, are you assuming, you know, flat sort of development? Any sort of detail you could provide would great because everybody knows how great the the Rolex and, you know, all the store expansions are.

Jon Cox
Head of Swiss Equities & European Consumer Equities at Kepler Cheuvreux

It's a great story. It's just people are obviously a bit concerned more about the non supply constrained stuff. Thank you.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Yeah. Yeah. Yeah. Joy, as you know, we have a really great portfolio of of brand partnerships. The period I referred to, the volatile period, really impacted the kind of price segment sort of 3,000 to 7,000 around, know, the brands that are in that segment.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Collectively, those brands has just been very typical of industry. It's pragmatic. It's responsive. The response in terms of new product development and and marketing has been and pricing, I think, has been very, very good to be worked with the brands. There's more product new product impact.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Again, during the COVID years, new products, you know, were subdued a bit because it was, you know, obviously such initially huge demand going on and, you know, production was optimized during that time. But Watch and Wonders this year and the other brands that are presenting new products, We were very, very pleased by we've already had deliveries of new products and the reaction to the market's been good. So, you know, we're not calling out anything specifically with regards to those brands, and we'd regard today's market as very much more recognizable in terms of consumer behavior and brand momentum.

Adrien Duverger
Adrien Duverger
Equity Research Associate at Goldman Sachs

Great. Thank you.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Sure.

Operator

And our next question is from Alison Leigold from Deutsche Numis. Please go ahead.

Alison Lygo
Director - Retail Equity Research at Deutsche Numis

Morning, thank you for taking my questions. Three if I might please. The first one was just on how you talked about brands and their kind of reaction to the import tariffs and taking a bit of a price and also kind of some of the contraction on the margin. I'm just wondering if that's impacting how you're thinking about the ranging across your network in terms of those different brands where maybe you're being required to kind of take a bit more pain or maybe actually you feel like some brands are taking more price than perhaps their their brands in the position to support, kind of coming back to your earlier point in terms of more rational pricing. So just wondering impacting anything there in terms of how you're thinking about the range that you're putting to consumers.

Alison Lygo
Director - Retail Equity Research at Deutsche Numis

And then the second one was just around supplier payment terms. So you were clear that there was a one off change there in terms of a working capital impact. Is that at all connected to what's happening in The US and those kind of supplier brands, or is it just a totally different kind of supplier base and completely unconnected? And then I'll come back on Roberto coin if that's okay.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Okay, Alison, thanks. The changes that have happened, football impact, you know, ranging overall, you know, we have great brand partnerships. We manage things long term with the brands, and there isn't anything within kind of differentiated behavior of the brands, if you like, that would cause us to reconsider any of that. So there'll be no impact on the on arranging from the tariff implications.

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

In terms of the payment terms, it is a one off correction by some of our network that they reduced terms in both The UK as well as in The US. We view it as a one off, and it's probably linked to working capital from their side, pushing it on to the distribution network. It should normalize, so our cash conversion should come back to the seventies or so in the coming year.

Alison Lygo
Director - Retail Equity Research at Deutsche Numis

Brand. That's helpful. Thank you. And then just

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

It's not connected to the tariffs, by the way.

Alison Lygo
Director - Retail Equity Research at Deutsche Numis

Okay. Got it. Thank you. And then just on Roberto Coin and maybe some of your kind of expectations and sort of plans for growth there in the year ahead. Just wondering how we should be thinking about the incremental impact from those monogram boutiques, in terms of revenue and how maybe the operating economic shift, and maybe how we should be be thinking about the the the margins of that that bit of the business progressing. Thank you.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Well, it's, you know, it's gonna be an important year for Roberto Coin. We've just spent the last year getting to know Roberto and his family, his management, in in Italy and and also with Peter Webster and the team in The US and getting to understand the market, the operate, and meeting a lot of the customers, myself and and David Hurley, but and Las Vegas for the Couture JCK show and met many of the customers. We met quite a few last year, but we met a great deal more this year. It's a great, great brand. It's a fabulous product.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

It's on a great market. That's really the best market in the world for luxury branded jewelry and for jewelry overall as The US market. A great portfolio of customers and distribution. Now we've added to that some significant investment, obviously, behind the Dakota Johnson campaign. And it's a brand that clearly is ripe for elevated distribution and the, you know, consumer presentation and right for mono brand development.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Our plans are to do mono brands directly and in some cases where we are in a strong position within those markets. And also, plan to do it with good branded partners that are stronger regionally through a franchise model, but also upgrading the presentation in our wholesale distribution, both with our strong independent partners and the department stores, and we're doing ecom. The three stores that David announced at all the markets that we're already strong in, one in Vegas, one in New York in Hudson Yards, and one in Miami Design District that was there already. We're just expanding the space and kind of upgrading the presentation. So the financials obviously are attractive from a margin standpoint because, effectively, we'll get combined wholesale and retail margin.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

And, yeah, very, very excited and confident about about the prospects for the brand.

Alison Lygo
Director - Retail Equity Research at Deutsche Numis

Brand, thank you very much.

Operator

Thank you. And our next question is from Kate Calvert from Investec. Please go ahead.

Kate Calvert
Kate Calvert
Equity Analyst - Head of Retail/Consumer Research at Investec Group

Morning, everyone. Just coming back on Alison's question on Roberto Coin and trying to pin you down a bit more. Should we think about Roberto Coin as being a low single digit growth business or a mid single digit growth business? What sort of rate of growth do you think we should be assuming for that business? And also, just on the accounting, when you start putting Mono's brand stores in, will that go into the wholesale line, or does that go under The U.

Kate Calvert
Kate Calvert
Equity Analyst - Head of Retail/Consumer Research at Investec Group

S. Other bit line as far as sales are concerned? And then my second question is just going back to the acquisition of the Ernest Jones package of stores, which you acquired a couple of years ago in The UK. Could you just update us on the sort of returns and where you are with that package of stores and the performance they achieved last year? Thanks so much.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Kate, we're not gonna give you a specific, you know, help on the growth plans that we have We did well with Reverto coin last year. We were anticipating perhaps some reaction from the wholesale distribution, a lot of whom we compete with obviously in the watch world, but the reaction to that distribution has actually been good. So, we start with a strong base, good momentum, and obviously stores are incremental, online is incremental, expanded space. And our wholesale partners, department stores, and otherwise would hope would be incremental.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

So we've got a lot to go out, but we've formulated plans. I think we've gone about it in a in a good way, as I said earlier, getting to know the people, the product, the market, the customers well before initiating the growth plans that we have for this year. So we'll probably be more communicative as the year goes on, but I'm not going to give you any further direction on the assumed growth for Roberto at this point. On the technical accounting

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

No. In terms of what we're going to record the sales for the monobrands, a, I mean, it remains a very substantial part of the business going through wholesale, obviously. That will go in under our US normal sales as part of The US business and not separate it into the wholesale segment. In terms of the E and Y sort of returns as such, obviously when we acquired the business, it was predominantly inventory purchase. So we bought 32,000,000 of inventory for a total consideration of 47, I think it was.

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

So the value of the asset that we acquired was nominal. And what we essentially got was the right to the agencies. That was the big win in that acquisition. So the returns overall has been really, you know, helpful and good. We we haven't disclosed, you know, any specifics on it, so I'm not gonna go into that level of detail.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

And it's LA does get to rationalize distribution and presentation in a number of the regional markets, you know, where where we around the country, so it's it's been a a positive step for us, I think, honestly, positive step for the market overall.

Kate Calvert
Kate Calvert
Equity Analyst - Head of Retail/Consumer Research at Investec Group

Just follow-up with one other question. You're sounding quite positive on the innovation that's coming through for Peak. Do you think the balance or mix between the entry and higher end sort of watch price points is back to normal and the innovation is sort of back to pre Covid levels?

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

I think, yes, the the the impact of new products, maybe even a wee bit better, you know, because there was a bit of catch up to do. I think new products didn't get the same sort of featuring during this, you know, volatile COVID influence period. So it's or it's just you'll see the products. We announce them. You'll see them.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

You'll see them from the brand. You'll see them from us, and it's a great combination of new product excitement supported with great marketing. So it's, yep, positive for sure. And we are obviously working with the brands very closely on product launches and, you know, co op activity, whether it's advertising or events or, you know, online activity so on and so on. All goods and good for the market, and as I've said a few times, very much more recognizable versus this, you know, period that come through.

Kate Calvert
Kate Calvert
Equity Analyst - Head of Retail/Consumer Research at Investec Group

Much.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Thanks, Kate.

Operator

Thank you. And as a reminder, to ask a question over the phone, please signal by pressing star one. You may also submit your questions over the webcast. Now our next question is from Melanie Agrippolo from BNP Paribas. Go ahead.

Melania Grippo
Equity Research - European Luxury Goods at BNP Paribas

Good morning, everyone. This is Melanie Agrippolo from BNP Paribas. I have two questions. First question is on your CPO business. You mentioned that the the certified pre owned is growing very strongly with Rolex becoming the number two watch brand.

Melania Grippo
Equity Research - European Luxury Goods at BNP Paribas

I was wondering if there is any significance, any difference in The UK versus The US, if you plan to add further locations for Rolex and the other CPO stores, And, you know, what is your you know, what do you believe is the number that you can achieve there? And my second question is on the online. If you can please remind us what it represents. Thank you.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

So CPO, mean, the pre owned market was always and remains much more developed in The US, and that's been reflected in relative, you know, development of that category as well. Reminds you that we did acquire expertise in the category when we acquired Analog Shift. And it's our own the team in Analog Shift that we've really developed Rolex CPU and and other pre owned. So with a great expertise and a very good market in The US and and great great momentum. The UK, having said all of that, has also and and proportionately has has done from where they came, I think, even better.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

And, again, we've set up all of the logistics for procurement and handling logistics between us and and Rolex back to the market. We've brought in, again, some expertise in the category, and it's been a great business development for us. In terms of changes in momentum and other positive impacts, we are implementing from from Rolex directly, you know, window and in store furniture. We're investing, you know, more in supporting the business online. And but a number of things, I think, just driving the momentum ahead and and what is, you know, clear that's a very significant topic for us overall online.

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

In terms of online, first, as a reminder, half of our business is not transactional online because Rolex and Papek doesn't allow us to do that. So that's just to put things into context. So our online business is around 6% or so of our business overall and growing, And we have high expectations in The US, as Brian alluded to earlier, so we're in the early stage there. We still need to integrate the Hodinke traffic into our network, which we're working on, that will happen throughout the next quarter or so. So we really look forward to that.

Melania Grippo
Equity Research - European Luxury Goods at BNP Paribas

Thank you.

Operator

Thank you. And as there are no further questions over the phone, I will hand, hand over for any webcast questions. Over to you, Danielle.

Executive

Thanks, Sergei. So we do just have time for some questions, from David Hughes from Shore Capital. Firstly, for the growth expectations for FY '26, how much do you expect in The US versus The UK? Secondly, do you have a number in mind for the number of doors in The US? And thirdly, what are the moving parts in your guidance between the negative a 100 basis points and the flat EBIT margin?

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Yeah. I mean, we'll we'll apologize to David of his, listening. We we we haven't given we never do the the split, you know, by by regional market overall. So we just give our overall guidance for the for our group for fiscal year twenty six. You know what?

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

We we have fewer doors, obviously, in the in The US, but they're bigger, they're highly productive. There's scope for expansion in The US with new developments that are going on with underserved markets and potential from acquisitions. So I think if you look at our track record of how we've grown, we'd hope to continue to, you know, still have those same levers of growth, which would include door expansion. But we've never been public on saying this is the overall objective. Quite honestly, it's kind of hard to determine in any event.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

The opportunities are there, but we've got to get gotta do the deals. We've gotta get the support of our brand partners, and we gotta execute, and we carry on doing all of that. And we will expand doors in in The US, but we've we've never given a specific number.

Anders Romberg
Anders Romberg
CFO at Watches of Switzerland Group

In terms of the margin question, obviously, if you hit the upper end of sort of our revenue guidance, you get operating leverage as a result. So that would obviously bring you closer to flat. At the lower end, would experience less leverage and therefore you would have a more deterioration on your margin.

Executive

Thank you. And with that, I'd like to hand back to you, Brian, for closing remarks.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Okay. Thanks. Thanks, Danielle. Thanks, everybody, for joining and your questions. You know, we're feeling good and upbeat as, you know, two months into this new fiscal year as we've described the market conditions that that we're in.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

We feel good about The US market strong, The UK market stabilized. It's all notwithstanding whatever might happen in tariffs, which I think we've made very, very clear. Our model clearly is working. It's advantaged overall. It allows us to outperform the market as we've consistently done now over a well over a decade, and we continue to do that.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Exciting growth plans ahead. We've got great projects. We've got the projects that we completed in last fiscal year, for example, Bond Street and Lenox in the in The US, the Patek, Salon and Connecticut and so on. Some great projects we completed last year, fully impacting on this year, a number of great projects that we have in the pipeline that we presented to you for this year. CPO, we talked a good bit about great momentum behind it.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

We love the business, and we continue to expand e com in The US, we think, is a really exciting opportunity that we will develop over the next few years. Roberto Coin is a great brand, and we think there's really great potential behind it, we've outlined all of the plans that we have there. And beyond Roberto Coin, other potential planned growth in jewelry, including the opening of our store in Manchester, which will happen in September. So we we feel good and upbeat about about the year ahead. And thank you for joining us again.

Brian Duffy
Brian Duffy
CEO at Watches of Switzerland Group

Thanks for your support, and a, you know, huge thank you to our team for having navigated through this this PD that we've had and for everything that they're doing to keep our clients very happy now. Thank you.

Executives
    • Brian Duffy
      Brian Duffy
      CEO
    • David Hurley
      David Hurley
      EVP & President
    • Craig Bolton
      Craig Bolton
      President - UK & Europe
    • Anders Romberg
      Anders Romberg
      CFO
Analysts
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