Watches Of Switzerland Group Plc · LSE:WOSG
Watches Of Switzerland — The Watches of Switzerland Group — H1 FY2021 Earnings Presentation
51 slides from Watches Of Switzerland's earnings presentation, December 2020
Slide 1: H1 FY21 Results
The Watches of Switzerland Group H1 FY21 Results December 2020 26 weeks ended 25 October 2020
Slide 2: Agenda
Agenda CEO Update Brian Duffy, Chief Executive Officer UK Update Craig Bolton, Executive Director UK US Update David Hurley, Executive Vice President US Financial Review & Outlook Anders Romberg, Chief Financial Officer Q&A The Watches of Switzerland Group H1 FY21 Results, December 2020 2
Slide 3: CEO Update
The Watches of Switzerland Group CEO Update Brian Duffy, CEO
Slide 4: Strategy Delivering Results
Strategy Delivering Results Our strategies are working and continue Good overall sales performance delivered given significant headwinds H1 FY21 Revenue -2.6%, Q2 FY21 +21.5% vs LY (constant currency); we estimate a sales impact of c. £80 million due to pandemic-related disruption Digital activity,
Slide 5: Delivering on Strategic Goals
Delivering on Strategic Goals Revenue (£m) Adjusted EBIT* (£m) 500 Adj EBIT Margin % (£m) 450 428.7 45 12% 414.3 41.5 400 40 10.0% 10% 350 35 31.1 300 30 7.3% 8% 250 25 6% 200 20 150 15 4% 100 10 2% 50 5 0 0 0% H1 FY20 H1 FY21 H1 FY20 H1 FY21 * Operating profit before exceptional items and IFRS 16 i
Slide 6: Performance Driven by Luxury Watches, Domestic Clientele
Performance Driven by Luxury Watches, Domestic Clientele Revenue mix by market 25.9% 29.0% H1 FY20 H1 FY21 UK 71.0%* *UK includes ecommerce sales: 74.1%* H1 FY20 = 4.3% of Group revenue US H1 FY21 = 7.3% of Group revenue Revenue mix by category 7.4% 6.2% 7.3% 6.4% H1 FY20 H1 FY21 Luxury watches Luxu
Slide 7: UK: Increased Marketing Spend Driving Digital Awareness and Sales
UK: Increased Marketing Spend Driving Digital Awareness and Sales FY21 Half Year Digital Reach (Up to 1 Nov 2020) Monthly Social Media Reach 41.7 million Digital Campaign Impressions 1 billion Total Campaign Clicks 10.7 million The Watches of Switzerland Group H1 FY21 Results, December 2020 7
Slide 8: US: Impactful Event and PR Activity Driving Awareness and Sales
US: Impactful Event and PR Activity Driving Awareness and Sales FY21 Half Year Digital Reach (Up to 1 Nov 2020) Mayors Monthly Social Media Impressions 2.2 million Digital Campaign Impressions 47 million PR Impressions 1 billion The Watches of Switzerland Group H1 FY21 Results, December 2020 8
Slide 9: Brexit
Brexit No supply disruption from major brand partners anticipated Continued support for our colleagues with European citizenship Reduced international business lessens pricing arbitrage resulting from potential exchange rate differential No potential transactional FX impact as both our UK and US ent
Slide 10: Our People
Our People The Watches of Switzerland Group H1 FY21 Results, December 2020 10
Slide 11: UK Update
The Watches of Switzerland Group UK Update Craig Bolton, Executive Director UK
Slide 12: Timeline Since March 2020 Lockdown
Timeline Since March 2020 Lockdown Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 March April May June July August September October November December Stores Lockdown Stores National Lockdown in All stores in Re-opened All stores in UK closed Restricted trading in certain locations Wales England, selected England
Slide 13: Our People
Our People Community 25,000 eLearning Support Continuation modules of Team Fun completed & since Positivity March 2020 Adapting to new effective ways of engagement Established COVID Secure environments and maintained pay * Prices as of November 2020 The Watches of Switzerland Group H1 FY21 Results,
Slide 14: Ensuring Continuous Trading
Ensuring Continuous Trading Deposit programme and Clientelling Online Focus – New Transactional Brands Enhanced Marketing Activity Digital Marketing c Product Investment – New & Exclusives Traditional Media Click & c Collect in over 70 Stores * Prices as of November 2020 The Watches of Switzerland G
Slide 15: Multi Channel Customer Experience
Multi Channel Customer Experience By Personal Appointment Virtual Client Events Virtual Luxury Boutique * Prices as of November 2020 The Watches of Switzerland Group H1 FY21 Results, December 2020 15
Slide 16: Investment: New Stores
Investment: New Stores Communication Oxford, Kingston and Watford TAG Heuer Mono-Boutique Opened June – July 2020 Glasgow Rolex Mono-Boutique White City Tudor Mono-Boutique Opened 27th July 2020 Opened 25th September 2020 * Prices as of November 2020 The Watches of Switzerland Group H1 FY21 Results,
Slide 17: Investment: Watches of Switzerland Broadgate
Investment: Watches of Switzerland Broadgate Opened 2nd December 2020 * Prices as of November 2020 The Watches of Switzerland Group H1 FY21 Results, December 2020 17
Slide 18: Investment: Watches of Switzerland Knightsbridge
Investment: Watches of Switzerland Knightsbridge Opened 2nd December 2020 * Prices as of November 2020 The Watches of Switzerland Group H1 FY21 Results, December 2020 18
Slide 19: Investment: Bluewater Omega and Breitling Mono-Brand Boutique
Investment: Bluewater Omega and Breitling Mono-Brand Boutique Opened 2nd December 2020 * Prices as of November 2020 The Watches of Switzerland Group H1 FY21 Results, December 2020 19
Slide 20: Investment: Cardiff Breitling Mono-Brand Boutique
Investment: Cardiff Breitling Mono-Brand Boutique Opening December 2020 * Prices as of November 2020 The Watches of Switzerland Group H1 FY21 Results, December 2020 20
Slide 21: Mono-Brand Boutiques
Mono-Brand Boutiques Expansion of mono-brand boutique network Start of 17 FY21 End of 26 FY21 * Prices as of November 2020 The Watches of Switzerland Group H1 FY21 Results, December 2020 21
Slide 22: Fraser Hart Store Development
Fraser Hart Store Development Communication WOS Stratford Opens April 2021 M&W Kingston WOS Brent Cross Opens May 2021 Opens May 2021 * Prices as of November 2020 The Watches of Switzerland Group H1 FY21 Results, December 2020 22
Slide 23: New Goldsmiths Luxury Concept
New Goldsmiths Luxury Concept * Prices as of November 2020 The Watches of Switzerland Group H1 FY21 Results, December 2020 23
Slide 24: New Goldsmiths Luxury Concept
New Goldsmiths Luxury Concept * Prices as of November 2020 The Watches of Switzerland Group H1 FY21 Results, December 2020 24
Slide 25: New Goldsmiths Luxury Concept
New Goldsmiths Luxury Concept * Prices as of November 2020 The Watches of Switzerland Group H1 FY21 Results, December 2020 25
Slide 26: UK Division Focus on Opportunities
UK Division Focus on Opportunities Maximising the opportunities Multi-Channel Client Investing in Marketing Our People Continuous Trading Experience and the Estate Highly Motivated and Achieving Market Team and Technically Accelerated Investment Energised Share Gains Advantaged and Expansion The Wat
Slide 27: US Update
The Watches of Switzerland Group US Update David Hurley, Executive Vice President
Slide 28: Key Priorities
Key Priorities • Health & Safety of our Colleagues & Clients • Continue to Elevate the Customer Experience • Maintaining our Capital Expenditure Programme including Mono-brand Boutique Expansion • Ecommerce Launch • Marketing Successes Delivering Brand Elevation and Product Appeal The Watches of Swi
Slide 29: Customer Experience: Virtual
Customer Experience: Virtual Tudor Black Bay Launch The Watches of Switzerland Group H1 FY21 Results, December 2020 29
Slide 30: Customer Experience: Virtual
Customer Experience: Virtual • Anecdotes from David on sales whilst stores closed Chef Morimoto Virtual Dinner The Watches of Switzerland Group H1 FY21 Results, December 2020 30
Slide 31: Customer Experience: Virtual
Customer Experience: Virtual Analog Shift Instagram Event The Watches of Switzerland Group H1 FY21 Results, December 2020 31
Slide 32: Customer Experience: Physical
Customer Experience: Physical Mayors Café and In-Person Appointments The Watches of Switzerland Group H1 FY21 Results, December 2020 32
Slide 33: Customer Experience: Physical
Customer Experience: Physical Patek Philippe Event The Watches of Switzerland Group H1 FY21 Results, December 2020 33
Slide 34: Customer Experience: Physical
Customer Experience: Physical Geneva Watch Days The Watches of Switzerland Group H1 FY21 Results, December 2020 34
Slide 35: Customer Experience: Physical
Customer Experience: Physical Grand Seiko Nature of Time The Watches of Switzerland Group H1 FY21 Results, December 2020 35
Slide 36: Mono-Boutique Expansion
Mono-Boutique Expansion Roosevelt Field – Garden City, NY The Gardens – Palm Beach Gardens, FL The Gardens – Palm Beach Gardens, FL King of Prussia – King of Prussia, PA The Watches of Switzerland Group H1 FY21 Results, December 2020 36
Slide 37: Ecommerce Launch
Ecommerce Launch The Gardens – Palm Beach Gardens, FL - Opened November 2020 The Watches of Switzerland Group H1 FY21 Results, December 2020 37
Slide 38: Marketing: 50 Cent's Dinner Soho
Marketing: 50 Cent’s Dinner Soho • Anecdotes from David on sales whilst stores closed The Watches of Switzerland Group H1 FY21 Results, December 2020 38
Slide 39: Marketing: Contemporary Artist, Olivia Steele Installation
Marketing: Contemporary Artist, Olivia Steele Installation • Anecdotes from David on sales whilst stores closed The Watches of Switzerland Group H1 FY21 Results, December 2020 39
Slide 40: Marketing: New Multibranded Campaign Mayors Jewellery Début
Marketing: New Multibranded Campaign Mayors Jewellery Début • Anecdotes from David on sales whilst stores closed The Watches of Switzerland Group H1 FY21 Results, December 2020 40
Slide 41: Marketing: Celebrity Dressing for Mayors Jewellery – American Music Awards
Marketing: Celebrity Dressing for Mayors Jewellery – American Music Awards • Anecdotes from David on sales whilst stores closed The Watches of Switzerland Group H1 FY21 Results, December 2020 41
Slide 42: US Market
US Market Fragmented Market Momentum in the Marketplace Initiatives to Drive Future Growth Through: New Projects / White Refurbishments Ecommerce Acquisitions Space The Watches of Switzerland Group H1 FY21 Results, December 2020 42
Slide 43: Financial Results & Outlook
The Watches of Switzerland Group Financial Results & Outlook Anders Romberg, CFO
Slide 44: P&L (pre-IFRS 16)
P&L (pre-IFRS 16) (£m) H1 FY21 H1 FY20 Yoy % - Adjusted EBITDA +26.5% to £52.2 million, achieving margin Group revenue 414.3 428.7 (3.4)% of 12.6% (H1 FY20: 9.6%) Net margin 150.5 160.6 (6.3)% - Adjusted EBIT +33.1% to £41.5 million (H1 FY20: £31.1 Margin % 36.3% 37.5% (120)bps million) Store costs
Slide 45: Balance Sheet (pre-IFRS 16)
Balance Sheet (pre-IFRS 16) 25 Oct 27 Oct (£m) 2020 2019 Yoy % - Continued investment with £9.1 million of expansionary Non-current assets capex (H1 FY20: £12.5 million) Goodwill & Intangible assets 151.9 127.0 19.6% PPE 97.9 105.3 (7.0)% - Controlled inventory levels, +£1.2 million (0.5%) vs last y
Slide 46: Cashflow
Cashflow (£m) H1 FY21 H1 FY20 Yoy % Free cash flow +£72.0 million (+163.0%) to £116.1 million Adjusted EBITDA 52.2 41.2 26.5% - Further improvement in working capital Share-based payments 1.6 0.1 n/m Working capital 69.9 18.4 280.9% - Free cash flow conversion of 222.6% (H1 FY20: 107.1%) Cash genera
Slide 47: Net Debt and Financing
Net Debt and Financing Facility Expiring Amount - Net debt £22.7 million at 25 October 2020 June 2024 £120.0m - Reduction of £107.0 million vs 26 April 2020; £116.1 UK Term Loan – UK LIBOR +2.25% million free cash flow offset by expansionary capex UK Revolving Credit Facility – UK June 2024 £50.0m L
Slide 48: Financial KPIs
Financial KPIs Return on Capital Employed* Free cash flow (£m) 17.5% 140 17.2% 116.1 120 17.0% 100 16.5% 80 16.0% 15.7% 60 44.1 15.5% 40 15.0% 20 14.5% 0 H1 FY20 H1 FY21 H1 FY20 H1 FY21 * ROCE calculated on a LTM basis through 25 October 2020 4-Wall EBITDA % Adjusted EBITDA (£m) 20% 18.9% 60 52.2 15
Slide 49: Positive Start to Q3 FY21
Positive Start to Q3 FY21 - Q3 FY21 has had a positive, stronger than anticipated start despite Sales variance vs LY (constant Q3 FY21 being impacts from national lockdowns in the UK currency) to date1 - Group revenue for 7 weeks to 13 Dec 2020 +11.9% in constant currency, +11.2% in reported UK 7.7%
Slide 50: FY21 Guidance (pre-IFRS 16, 53 week basis)
FY21 Guidance (pre-IFRS 16, 53 week basis) FY21 guidance FY21 guidance assumes: Total Revenue £900.0 to £925.0 million - Strong luxury watch market in the UK and US and a consistent level of supply EBITDA margin & Adjusted EBITDA +1.5% to +2.0% vs last margin year - Continued weak footfall in stores
Slide 51: Q&A
Q&A The Watches of Switzerland Group H1 FY21 Results, December 2020 51
The Watches of Switzerland Group — H1 FY2021 Earnings Presentation on 6ix