Half Year 2026 Watches of Switzerland Group PLC Earnings Call Transcript
Key Points
- Watches of Switzerland Group PLC (WOSGF) reported a 10% increase in sales in constant currency for the first half, driven by a strong 20% growth in the US market.
- The company's EBIT rose by 6% to GBP69 million in constant currency, with a significant improvement in free cash flow, up 71% from the previous year.
- The Certified Pre-Owned segment, particularly Rolex, has become the second-largest brand for the company in both the UK and US, indicating strong market acceptance.
- E-commerce sales grew by 17% in constant currency, with significant investments in the US, including a transition to the Shopify platform, boosting online performance.
- The company completed a GBP25 million share buyback program, reflecting confidence in its financial position and commitment to returning value to shareholders.
- Net product margin declined by 90 basis points due to adverse product mix and reduced brand margins from US tariffs.
- The adjusted EBIT margin decreased by 30 basis points to 8.1%, impacted by the decline in product margin rates.
- UK sales growth was modest at 2%, affected by previous showroom closures, indicating a challenging market environment.
- The company faces uncertainties regarding consumer behavior in the UK and potential price sensitivity in the US during the holiday season.
- There is ongoing uncertainty about the impact of US tariffs on product pricing and brand responses, which could affect future profitability.
Good morning, everyone. Thanks for joining us. Our presentation this morning will commence with me, Group CEO, Brian Duffy. I'll be taking you through our first-half highlights, talking about our growth initiatives in the first half. I'll then be followed by our CFO, Anders Romberg, who will give you more detail and color on the numbers. Then me again to give you a bit more background on our growth pillars and where we stand, and then we'll open things up for your questions.
So the top-line numbers for the first half year that ended in October, our sales is GBP845 million. For the half, we were up 10% in constant currency for the group, driven by a very strong performance in the US, plus 20% in US dollars. UK was decent at plus 5% when we adjust for the store closures that we had last year. All in all, a good half year in terms of sales.
In terms of profits, EBIT came in 6% ahead of last year at GBP69 million in constant currency. Our leverage is 0.6 times, EBITDA leverage to debt. Our free cash
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