Watches Of Switzerland Group Plc · LSE:WOSG
Watches Of Switzerland — FY20 Earnings Presentation
48 slides from Watches Of Switzerland's earnings presentation, August 2020
Slide 1: FY20 Results, Q1FY21 Trading
FY20 Results, Q1FY21 Trading August 2020 52 weeks ended 26 April 2020, 13 weeks ended 26 July 2020
Slide 2: Agenda
Agenda CEO Update Brian Duffy, CEO UK Update Craig Bolton, Executive Director UK US Update David Hurley, Executive VP USA FY20 Financial Results and FY21 Outlook Anders Romberg, CFO Summary Brian Duffy, CEO Q&A 2
Slide 3: CEO Update
CEO Update m= = Brian Duffy, CEO Mappin & Webb GOLDSMITHS
Slide 4: FY20: Strategy Working
FY20: Strategy Working Strong Momentum Through Week 46 US Success Cartier Boutique Watches of Switzerland Regent St Market Share Gains Impactful Marketing COVID-19 Glasgow Omega Mono-Boutique Audemars Boutique, Mayors, Lenox Square, Atlanta, Georgia 4
Slide 5: FY20 Record Revenue, Profit and Return on Capital Employed
FY20 Record Revenue, Profit and Return on Capital Employed Revenue (£m) Adjusted EBIT (£m) ROCE (%) +5.9% +7.8% +110bps 15.8% (reclassified +4.8%)* 819.3 55.9 14.7% 773.5 51.8 FY19 FY20* FY19 FY20 FY19 FY20 * During FY20 the Group has reclassified certain costs and revenue, mainly to correctly refle
Slide 6: Growing Market Share in UK, US and Ecommerce
Growing Market Share in UK, US and Ecommerce Market Share (Calendar 2018) Market Share (Calendar 2019) The WOS Group The WOS Group 35.2% Total UK 37.2% 200bps market share gain Others Others 64.8% 62.8% Source: GfK, Company data UK Online Only The WOS Group The WOS Group 40.4% 43.7% 330bps market sh
Slide 7: Resilient Performance and Flexible Operations During Lockdown
Resilient Performance and Flexible Operations During Lockdown Clienteling Ecommerce Brand Partner Engagement Digital Cartier Boutique Watches of Switzerland Regent St Virtual Team Training Team Spirit Preparations Glasgow Omega Mono-Boutique 7
Slide 8: Strong Q1 Trading Despite Store Closures and Reduced Traffic
Strong Q1 Trading Despite Store Closures and Reduced Traffic Q1 FY21 May 2020 June 2020 July 2020 Q1 FY21 Strong start to FY21 UK sales yoy % (86.8)% +1.4% +1.1% (30.1)% % traded hours1 0% 34% 78% 35% Lack of tourism/travel offset by strong domestic demand US sales yoy % (72.7)% (2.7)% +27.0% (20.4)
Slide 9: Domestic Sales Offsetting Significant Reduction in Tourism/Airport Business
Domestic Sales Offsetting Significant Reduction in Tourism/Airport Business Revenue by consumer segment Q1 FY20 Q1 FY21 2.1% 1.2% 10.9% Weak tourism and airport demand, offset by increased domestic demand 41.0% driving shift in 28.6% demographic 68.1% 22.1% 26.0% Domestic UK / EU Domestic US Tourism
Slide 10: WOS Group Ideally Positioned for Accelerated Market Share Gains in FY21
WOS Group Ideally Positioned for Accelerated Market Share Gains in FY21 Demand Exceeding Supply for Key Brands Importance of Digital / Social Importance of Multi-channel Cartier Boutique Watches of Switzerland Regent St Increased Brand Engagement Technology (CRM, Remote Selling, Appointment Manageme
Slide 11: UK Update
UK Update Craig Bolton, Executive Director UK 11
Slide 12: Immediate Focus
Optimised Commercial Response to Lockdown UK Stores CLOSED Enhanced Clienteling Assurance Focus on driving sales Immediate Focus Positivity Online Sales Adaptability 12
Slide 13: Driving Online During Lockdown
Driving Online During Lockdown New Transactional Brands Pre-Orders Digital Campaign c 13
Slide 14: Increase in Conversion Offsetting Traffic Declines
Increase in Conversion Offsetting Traffic Declines UK Malls Traffic down c. 40-50% London Traffic down c. 60-70% Heathrow Traffic down c. 80%-90% International business down c. 92% * As measured via Premier Tax Free refund levels Increased Client Appointments Increased Conversion 14
Slide 15: WOS Group Technology Driving Customer Reach-Out
WOS Group Technology Driving Customer Reach-Out CRM Outreach By Personal Appointment Digital Marketing 15
Slide 16: Increased Brand Partnering On New Product Launches & Exclusives
Increased Brand Partnering On New Product Launches & Exclusives New Product Launches from Key Brands E-learning Modules created to support all launches Full Marketing plan across all channels Launching in the Virtual World 16
Slide 17: Development of Rolex Showrooms & Mono-Brand Boutiques
Development of Rolex Showrooms & Mono-Brand Boutiques Elearning Modules created to support all launches Development of Rolex Showrooms Expansion of Mono–Brand Boutiques 17
Slide 18: Successful Fraser Hart Integration with New Store Development Plans
Successful Fraser Hart Integration with New Store Development Plans M&W York WOS Stratford M&W Kingston WOS Brent Cross 18
Slide 19: Rolex Mono–Brand Boutique: Glasgow
Rolex Mono–Brand Boutique: Glasgow Opened 27th July 19
Slide 20: Mappin & Webb: Cambridge
Mappin & Webb: Cambridge Opened 3rd July 20
Slide 21: TAG Heuer Mono-Brand Boutiques
TAG Heuer Mono-Brand Boutiques Kingston Opened 1st July Oxford Opened 24th June Watford Opened 9th July 21
Slide 22: Watches of Switzerland: Knightsbridge
Watches of Switzerland: Knightsbridge Due for completion 20th November/ Rolex Room mid September 22
Slide 23: Watches of Switzerland: Broadgate
Watches of Switzerland: Broadgate Due to open 27th November Omega Boutique 23
Slide 24: Tudor Mono–Brand Boutique: Westfield London
Tudor Mono–Brand Boutique: Westfield London 24
Slide 25: Edinburgh St James: Omega & Breitling
Edinburgh St James: Omega & Breitling 25
Slide 26: TAG Heuer Mono–Brand Boutique: Trafford Centre
TAG Heuer Mono–Brand Boutique: Trafford Centre 26
Slide 27: UK Division Poised for Further Market Share Growth
UK Division Poised for Further Market Share Growth Significant opportunity for further market share gains Expand multi-channel Focus on new Capital programme of opportunities across Continued Marketing, product, exclusives investment in luxury mono-brand advancement in awareness and and brand showro
Slide 28: US Update
US Update David Hurley, Executive VP USA 28
Slide 29: Successful Development of US Store Network and Infrastructure
Successful Development of US Store Network and Infrastructure First Mayors Mayors Audemars Miami Piquet WOS Group International Boutique Systems re-opens. Mayors in Atlanta implemented First new Merrick / Mayors Mayors Mayors across Mayors store Lennox Avalon Acquired Mayors stores redesign relocati
Slide 30: Bold, Impactful Marketing Driving Brand Awareness
Bold, Impactful Marketing Driving Brand Awareness FY20 Reach 2m Monthly Social Reach Outdoor & Print 715m PR 2.8bn 30
Slide 31: Mayors Lenox Square, Atlanta Relocation
Mayors Lenox Square, Atlanta Relocation 31
Slide 32: Mayors Merrick Park, Miami Relocation
Mayors Merrick Park, Miami Relocation 32
Slide 33: Mayors Avalon, Atlanta Relocation
Mayors Avalon, Atlanta Relocation 33
Slide 34: Positive Response to Re-Opening
Positive Response to Re-Opening 34
Slide 35: Grand Seiko x WOSG Global Launch – May 14th 2020
Grand Seiko x WOSG Global Launch – May 14th 2020 Virtual Launch Event Zoom Launch Spark AR/Social Sharing Retail Presentation Calibre/Emails Ecommerce 35
Slide 36: Great Press On Launch
Great Press On Launch PR activity to date: 871,734,906 *Unique visitors per month, number of people who have had the opportunity to be exposed to a story online. 36
Slide 37: Strategic Partner Brands: Mono-Brand Boutiques
Strategic Partner Brands: Mono-Brand Boutiques 37
Slide 38: Aventura, Miami Refurbishment FY21
Aventura, Miami Refurbishment FY21 38
Slide 39: American Dream, New Jersey FY22
American Dream, New Jersey FY22 39
Slide 40: US Market Well-Positioned for Long Term Growth
US Market Well-Positioned for Long Term Growth Fragmented Market No Significant Leadership Initiatives to Drive Future Growth Through: Refurbs New Projects White Space E-commerce Acquisitions 40
Slide 41: Financial Results and FY21 Outlook
Financial Results and FY21 Outlook Anders Romberg, CFO 41
Slide 42: P&L (pre-IFRS 16)
P&L (pre-IFRS 16) (£m) FY20 FY19 Yoy % FY19 weeks 1-46 FY20 weeks 1-46 Luxury watches 686.4 631.4 8.7% Luxury jewellery 70.7 74.7 (5.4)% Luxury Luxury Other 62.2 67.3 (7.6)% jewellery jewellery Other 8.7% Other Reclassification (8.8) - - 9.9% 7.6% 8.8% Net sales 810.5 773.5 4.8% Net margin 304.7 290
Slide 43: Balance Sheet (pre-IFRS 16)
Balance Sheet (pre-IFRS 16) (£m) 26 April 20 28 April 19 Non-current assets • Goodwill increase due to Fraser Hart acquisition Goodwill 136.6 109.7 • Property, plant and equipment down reflecting fixed asset Intangible assets 17.9 18.0 additions of £22.4m offset by depreciation £15.6m, disposals PPE
Slide 44: Refinancing
Refinancing Current facilities Expiring Amount UK term loan – UK LIBOR + 2.25% June 2024 £120m • As part of our IPO our debt was restructured UK revolving credit facility – UK LIBOR +2.0% June 2024 £50m • Year-end net debt1 was £129.7m vs. pre COVID-19 guidance of £120.0m to £130.0m: US asset back f
Slide 45: Cash Flow (pre-IFRS 16)
Cash Flow (pre-IFRS 16) (£m) FY20 FY19 • Inventory: increased in-take of desirable luxury watches pre- Adjusted EBITDA 78.1 68.8 lockdown Exceptional items and non-trading (5.0) (7.1) • Total inventory turns 1.9x (FY19: 2.0x) (Increase)/decrease in inventory (35.5) 5.8 Decrease in debtors 13.6 2.4 •
Slide 46: FY21 Guidance (pre-IFRS 16, 53-week basis)
FY21 Guidance (pre-IFRS 16, 53-week basis) FY21 Guidance1 • Encouraging trading during Q1 FY21; Group well positioned to continue delivering on its strategy Total revenue £840.0-£860.0m • FY21 guidance assumes: EBITDA margin & Adjusted EBITDA • continued strong luxury watch market in the UK and US F
Slide 47: Summary
f lll wot | a “| sai) | Summary Brian Duffy, CEO Mappin & Webb GOLDSMITHS
Slide 48: Q&A
Q&A 48
Watches of Switzerland Group — FY20 Earnings Presentation on 6ix