Watches Of Switzerland Group Plc · LSE:WOSG
Watches Of Switzerland — H1 FY23 Earnings Presentation
46 slides from Watches Of Switzerland's earnings presentation, December 2022
Slide 1: The Watches of Switzerland Group H1 FY23 Results
The Watches of Switzerland Group H1 FY23 Results December 2022 26 weeks ended 30 October 2022
Slide 2: Disclaimer
Disclaimer Cautionary note regarding forward-looking statements This presentation has been prepared by Watches of Switzerland Group PLC (the “Company”). It includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the us
Slide 3: Agenda
Agenda CEO Introduction and Overview Brian Duffy, Chief Executive Officer Xenia Client Experience Philippa Jackson, Executive Director HR ESG Kesah Trowell – Head of ESG The Watches of Switzerland Group Foundation Ruth Benford, Executive Director Marketing UK Projects Craig Bolton, President UK & Eu
Slide 4: Strong First Half Performance With Ongoing Market Share Gains in UK and US
Strong First Half Performance With Ongoing Market Share Gains in UK and US Group Revenue £765m, +31% at reported rates vs H1 FY22, +23% at constant currency Adjusted EBIT £87m: +29% vs H1 FY22 Adjusted EBIT margin 11.3%: -20bps vs H1 FY22 ROCE 27.6%: +450bps vs H1 FY22 20 showrooms opened in H1 FY23
Slide 5: Taking share in a strong and growing market
Taking share in a strong and growing market Global luxury watch market by region at retail price (LTM) Our total addressable market is strong and growing USD $bn UK TAM*: = c. $23bn 23 22 21 16 Europe US 2019 2020 2021 LTM UK Europe US * TAM = Estimated Total Addressable Market = Major Western marke
Slide 6: Unique model driving market share gain
Unique model driving market share gain VIRTUAL BOUTIQUE CRM ECOMMERCE SAP SYSTEMS MARKETING CLIENT EXPERIENCE The Watches of Switzerland Group H1 FY23 Results, December 2022 6
Slide 7: WOSG US share of sales growing and performance led by domestic clientele
WOSG US share of sales growing and performance led by domestic clientele Revenue mix by market 24% 29% 41% H1 H1 FY19 FY22 FY23 59% 71% UK & Europe 76% US Revenue mix by customer segment 2% 4% 12% 21% H1 H1 FY19 Domestic UK/EU/US FY22 FY23 67% Tourism 96% Airports 98% The Watches of Switzerland Grou
Slide 8: Robust and Flexible Business Model
Robust and Flexible Business Model Well diversified product and brand mix 6% 9% 6% 7% 7% 10% 7% 9% H1 H1 9% FY19 Top 8 Luxury Watch Brands FY22 FY23 Other Luxury Watch Brands 72% 78% Luxury Jewellery 80% Other The Watches of Switzerland Group H1 FY23 Results, December 2022 8
Slide 9: Xenia
The Watches of Switzerland Group Xenia Philippa Jackson – Executive Director HR
Slide 10: Xenia: Establishing The Benchmark for Luxury Service with the Ritz-Carlton
Xenia: Establishing The Benchmark for Luxury Service with the Ritz-Carlton Antonia Hock, former Global The Ritz-Carlton led the The Ritz-Carlton Leadership way for Apple’s retail Head of The Ritz-Carlton Center Expertise service strategy Leadership Center led the project The Watches of Switzerland G
Slide 11: Global Launch of Xenia October 2021
Global Launch of Xenia October 2021 The Watches of Switzerland Group H1 FY23 Results, December 2022 11
Slide 12: Significant progress made so far
Significant progress made so far Client Consultation: 65% satisfied pre-Xenia – now 95% An exceptional first impression By Appointment: 71% said yes pre-Xenia – now 94% Xenia Mystery Shop: The WOW pillar has scored 82% Xenia Mystery Shop: Walk in Visits – the welcome and fact finding has scored 93%
Slide 13: ESG
The Watches of Switzerland Group ESG Kesah Trowell – Head of ESG
Slide 14: Continuing to WOW clients, while caring for colleagues, our communities and our planet
Continuing to WOW clients, while caring for colleagues, our communities and our planet PEOPLE PLANET RESPONSIBLE SOURCING The Watches of Switzerland Group H1 FY23 Results, December 2022 14
Slide 15: We are making progress across our three ESG pillars
We are making progress across our three ESG pillars • Transitioning to net zero by 2050, with target validation with the SBTi scheduled early 2023 • Increasing focus on environmental and socially responsible product innovation Environment • Strong growth in sales of pre-owned watches • Increasing re
Slide 16: Our Foundation
The Watches of Switzerland Group Our Foundation Ruth Benford – Executive Director Marketing
Slide 17: The Watches of Switzerland Group Foundation Over £2.7 million allocated so far
The Watches of Switzerland Group Foundation £4.5 million donated to The Watches of Switzerland Group Foundation Over £2.7 million allocated so far The Watches of Switzerland Group Foundation: Board of Directors US Directors Brian David John Duffy Gandy Hannah Chair Johnathan Joseph Shirley Ingold “D
Slide 18: Key Partnerships
Key Partnerships FOODBANKS UK & US FUEL BANK FOUNDATION UK PRINCE’S TRUST UK & US HABITAT FOR HUMANITY US CRISIS UK The Watches of Switzerland Group H1 FY23 Results, December 2022 18
Slide 19: Prince's Trust Palace to Palace
Prince’s Trust Palace to Palace Thank you to each and every one of your riders who took to the Mall and rode to Windsor - their efforts are inspiring, and they truly did cycle to change young lives Johnathan Townsend – CEO Prince’s Trust £100k raised for the Prince’s Trust The Watches of Switzerland
Slide 20: Watches of Switzerland Group Volunteering
Watches of Switzerland Group Volunteering Over 300 hours of volunteering The Watches of Switzerland Group H1 FY23 Results, December 2022 20
Slide 21: UK & Europe Projects
The Watches of Switzerland Group UK & Europe Projects Craig Bolton - President UK & Europe
Slide 22: Watches of Switzerland Battersea Power Station Opened October 2022
Watches of Switzerland Battersea Power Station Opened October 2022
Slide 23: Mono-Brand Boutiques Battersea Power Station Opened October 2022
Mono-Brand Boutiques Battersea Power Station Opened October 2022
Slide 24: Goldsmiths Meadowhall Pre-Refurbishment
Goldsmiths Meadowhall Pre-Refurbishment
Slide 25: Goldsmiths Meadowhall Post-Refurbishment
Goldsmiths Meadowall Post-Refurbishment
Slide 26: UK Mono-Brand Boutiques
Breitling Canary Wharf TUDOR Glasgow UK MONO – BRAND BOUTIQUES Longines Glasgow OMEGA Canary Wharf
Slide 27: Rolex Boutique Relocation
Rolex Boutique Relocation Concept Mood Board - The Ultimate in Hospitality Concept Mood Board - The best Rolex bar in the world The Watches of Switzerland Group H1 FY23 Results, December 2022 27
Slide 28: Europe Mono-Brand Boutiques: Copenhagen
OMEGA Copenhagen Sept 2022 EUROPE MONO – BRAND BOUTIQUES Copenhagen Breitling Copenhagen Sept 2022
Slide 29: Europe Mono-Brand Boutiques: Stockholm
Breitling Stockholm June 2022 EUROPE MONO – BRAND BOUTIQUES Stockholm Breitling Mall of Scandinavia October 2022
Slide 30: OMEGA Mono-Brand Boutique Stockholm Opened 2nd December
OMEGA Mono – Brand Boutique Stockholm Opened 2nd December
Slide 31: US Projects
The Watches of Switzerland Group US Projects David Hurley - President North America & Deputy CEO
Slide 32: Mayors Boca Raton Pre-Refurbishment
Mayors Boca Raton Pre-Refurbishment
Slide 33: Mayors Boca Raton Post-Refurbishment
Mayors Boca Raton Post-Refurbishment
Slide 34: Mayors Program Status
MAYORS PROGRAM STATUS • Renovated 8 Mayors stores • 6 remaining to be completed by 2025
Slide 35: American Dream
American Dream The Watches of Switzerland Group H1 FY23 Results, December 2022 35
Slide 36: One Vanderbilt – Façade View
One Vanderbilt – Façade View
Slide 37: Financial Performance & Outlook
The Watches of Switzerland Group Financial performance & Outlook Bill Floydd - CFO
Slide 38: Another period of strong profitable growth
Another period of strong profitable growth Revenue (£m) Adjusted EBIT (£m) ROCE (%) 900 100 30.0% 27.6% 90 87 800 765 +450bps 80 25.0% +29% 23.1% 700 +31% 70 67 586 600 20.0% 60 500 50 15.0% 400 40 300 10.0% 30 200 20 5.0% 100 10 0 0 0.0% H1 FY22 H1 FY23 H1 FY22 H1 FY23 H1 FY22 H1 FY23 The Watches o
Slide 39: Income statement key highlights
Income statement key highlights Income Statement (£m) H1 FY23 H1 FY22 YoY % Income Statement presented pre-IFRS 16 and pre-exceptional items Revenue 765 586 31 • Revenue +31% on prior year, up 23% in constant currency Net margin 288 221 30 • Net margin % in line with last year reflecting stable prod
Slide 40: Balance sheet strength
Balance sheet strength Balance Sheet (£m) H1 FY23 FY22 % Goodwill & intangibles 200 178 12 • Continued investment with £27 million of expansionary capex (H1 FY22: £20 million) PP&E 137 113 21 • Inventory levels +£77 million (+25%) from improved ranging, Right-of-use assets 353 294 20 acquisitions an
Slide 41: Inventory build ahead of the Holiday period
Inventory build ahead of the Holiday period £384m £369m +5% +25% +14% +20% +4% £307m +2% Inventory Acquisitions New Watches Inventory FX Inventory FY22 Stores & H1 FY23 H1 FY23 Jewellery Constant Reported LFL Currency Rates The Watches of Switzerland Group H1 FY23 Results, December 2022 41
Slide 42: Strong trading supporting inventory ranging, CAPEX and acquisitions
Strong trading supporting inventory ranging, CAPEX and acquisitions Cash flow (£m, pre-IFRS 16) H1 FY23 H1 FY22 YoY % Adjusted EBITDA 104 83 26 Free cash flow of £56 million; 53% free cash flow conversion Working capital (27) 23 Tax (20) (3) • Working capital outflow with increased inventory Other 3
Slide 43: FY23 guidance reiterated
FY23 guidance reiterated FY23 guidance (pre-IFRS 16) FY23 guidance reflects: Revenue £1.50 - £1.55 billion • Visibility of supply of key brands, announced pricing, and confirmed showroom refurbishments, openings and closures Adjusted EBITDA margin flat to +0.5% • Organic basis, no acquisitions Depre
Slide 44: Summary
The Watches of Switzerland Group Summary Brian Duffy – CEO
Slide 45: Conclusions
Conclusions WOS model continues to drive incremental sales and market share gains We continue with our investment led growth strategies UK/US/Europe with a strong pipeline of projects Xenia Programme is positively impacting on client relations and sales conversions We are attracting and retaining co
Slide 46: Q&A
The Watches of Switzerland Group Q&A Brian Duffy and Bill Floydd
Watches of Switzerland Group — H1 FY23 Earnings Presentation on 6ix