Watches Of Switzerland Group Plc · LSE:WOSG
Watches Of Switzerland — The Watches of Switzerland Group — FY2022 Earnings Presentation
57 slides from Watches Of Switzerland's earnings presentation, July 2022
Slide 1: FY22 Results
The Watches of Switzerland Group FY22 Results July 2022 52 weeks ended 1 May 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 Update Brian Duffy Chief Executive Officer Financial Review & Outlook Bill Floydd Chief Financial Officer Q&A The Watches of Switzerland Group FY22 Results, July 2022 3
Slide 4: CEO Update
The Watches of Switzerland Group CEO Update Brian Duffy, CEO
Slide 5: A Year of strong growth
A Year of strong growth Strong growth achieved Group revenue +40% vs FY211 Continued momentum in the US and UK driven by domestic clientele US revenue +48% vs FY211 UK revenue +36% vs FY211 Strong demand for luxury watches: revenue +36% vs FY211 Luxury jewellery: revenue +86% vs FY211 Adjusted EBIT
Slide 6: Delivering record sales and profitability
Delivering record sales and profitability Adjusted EBIT (£m) and Adjusted EBIT Revenue (£m) margin %* 140 11.0% 1,400 130 1,238 120 10.0% 1,200 100 9.0% 1,000 905 78 811 80 8.0% 774 800 687 60 56 7.0% 600 568 45 43 40 34 6.0% 400 20 5.0% 200 0 4.0% FY17 FY18 FY19 FY20 FY21 FY22 0 Adjusted EBIT Adjus
Slide 7: UK has outperformed all major markets since 2000
UK has outperformed all major markets since 2000 Change in Luxury Watch Retail Sales Per Capita: 2000-2021 8.4% 7.8% 5.8% 5.0% 3.5% 2.7% 0.5% 0.9% 0.1% (1.6%) (1.9%) (3.7%) 2000-2010 2010-2021 Growth led by UK and US; our key Growth driven by Asian consumers markets Source: Company estimates based o
Slide 8: Opportunity to grow in new markets
Opportunity to grow in new markets Luxury Watch Per Capita Retail Sales (US$) 50 40 30 20 10 0 UK Italy France Germany Benelux Spain Nordics US 2019 2020 2021 Source: Company estimates where we operate The Watches of Switzerland Group FY22 Results, July 2022 8
Slide 9: UK, US and European markets continue to lead growth in calendar 2022
UK, US and European markets continue to lead growth in calendar 2022 Swiss watch exports growth (all price segments – wristwatches) 2022 YTD through to May 140% 119% 120% 99% 100% 80% 73% 60% 47% 39% 40% 36% 31% 28% 20% 13% 11% 0% (8%) (20%) (30%) (40%) US UK EU China Hong Kong World vs 2021 vs 2020
Slide 10: Significant opportunity in the growing luxury jewellery market
Significant opportunity in the growing luxury jewellery market Jewellery Demand YoY % Jewellery Demand per Capita (US$) 30 60% 25 50% 20 40% 30% 15 20% 10% 10 0% 2015 2016 2017 2018 2019 2020 2021 5 -10% -20% - 2017 2018 2019 2020 2021 US UK Europe World total US UK EU World total US CAGR 2015 to 20
Slide 11: WOSG US share of sales growing and performance driven by domestic clientele
WOSG US share of sales growing and performance driven by domestic clientele Revenue mix by market 24% FY19 UK 76% US 3% Revenue mix by customer segment 12% 21% Domestic UK/EU/US FY19 FY22 Tourism Airports 67% 97% The Watches of Switzerland Group FY22 Results, July 2022 11
Slide 12: Demand continues to outpace supply for luxury watches
Demand continues to outpace supply for luxury watches The Watches of Switzerland Group FY22 Results, July 2022 12
Slide 13: Watches and Wonders 2022
Watches and Wonders 2022 The Watches of Switzerland Group FY22 Results, July 2022 13
Slide 14: Iconic
Iconic OMEGA Speedmaster Professional TAG Heuer Gulf Monaco Cartier Santos Patek Philippe Calatrava Rolex GMT-Master II Moon Watch Panerai 40mm Luminor Marina Breitling Navitimer IWC Pilot Breitling Superocean Audemars Royal Oak The Watches of Switzerland Group FY22 Results, July 2022 14
Slide 15: Colour
Colour OMEGA Speedmaster 57 Breitling Superocean Longines Dolce Vita Rolex Oyster Perpetual TAG Heuer Aquaracer Professional Breitling Navitimer IWC Pilots Cartier Santos The Watches of Switzerland Group FY22 Results, July 2022 15
Slide 16: Environment
Environment Oris New York Harbor Billion Oyster Officine Panerai Luminor Marina Project 01 733 7766 Ulysse Nardin Diver X Panerai Packaging eSteel TAG Heuer Solar Cartier Solar Breitling Packaging Breitling ECONYL Straps The Watches of Switzerland Group FY22 Results, July 2022 16
Slide 17: Niche
Niche HYT Moon Runner SuperNova Blue Armin Strom Orbit First Edition H.Moser Streamliner Centre Seconds Speake-Marin Dual Time Lime Doxa Diving Watch MB&F LM Perpetual EVO Titanium MB&F Sequential EVO Chrono Bovet Miss Audrey Sweet Art The Watches of Switzerland Group FY22 Results, July 2022 17
Slide 18: Luxury jewellery
Luxury jewellery BETTERIDGE FG EST 1897 BVLGARI ‘ - a MAYORS BUCCELLAT! CHANEL d ) \ Mappin & Webb GOLDSMITHS MIKIMOTO
Slide 19: Continued investment in digital and technology to further enhance customer experience
Continued investment in digital and technology to further enhance customer experience Luxury Concierge By Personal Appointment CRM/Xenia Ecommerce • 45% of UK in-store sales through “By Personal Appointment” • UK Luxury Watch and Jewellery Virtual Boutique expanded to 31 colleagues, achieving 50 tim
Slide 20: UK: Digital marketing driving awareness
UK: Digital marketing driving awareness Digital Reach FY22 3 May 2021 – 1 May 2022 Monthly reach on social 57.2m (+24% YoY) Total campaign impressions 5.71bn (+79% YoY) (including search and shopping) Total campaign clicks 46.6m (+26% YoY) The Watches of Switzerland Group FY22 Results, July 2022 20
Slide 21: US: Impactful event and PR activity driving awareness
US: Impactful event and PR activity driving awareness Digital Reach FY22 3 May 2021 – 1 May 2022 Monthly impressions on social 8.2m (+228% YoY) Digital Campaign Impressions 1bn (+170% YoY) (including search and shopping) PR impressions 10bn (+89.6% YoY) The Watches of Switzerland Group FY22 Results,
Slide 22: Xenia client experience programme in partnership with Ritz Carlton
Xenia client experience programme in partnership with Ritz Carlton The Watches of Switzerland Group FY22 Results, July 2022 22
Slide 23: Our people
Our people The Watches of Switzerland Group FY22 Results, July 2022 23
Slide 24: 2022 engagement survey
2022 engagement survey Overall engagement score 86% 94% 90% Agreed or strongly agreed Agreed or strongly agreed “I feel positive about the “I am proud to work for future success of the this company” company” The Watches of Switzerland Group FY22 Results, July 2022 24
Slide 25: SAYE and Free Shares – January 2022
SAYE and Free Shares – January 2022 The Watches of Switzerland Group FY22 Results, July 2022 25
Slide 26: New Purpose and Values
New Purpose and Values The Watches of Switzerland Group FY22 Results, July 2022 The Watches of Switzerland Group FY22 Results, July 2022 26
Slide 27: Advancing the ESG programme
Advancing the ESG programme Developing our sustainability and social impact strategy: • Established ESG Board Committee and Head of ESG appointed • Recent memberships: • FTSE4Good Index • Business in the Community (BITC) • Fair Tax Mark Accredited • Committed to Net Zero emissions by 2050 • Supporti
Slide 28: The Watches of Switzerland Group Foundation
The Watches of Switzerland Group Foundation £4.5 million donated to date to The Watches of Switzerland Group Foundation. Over £1.5 million allocated so far. The Watches of Switzerland Group Foundation: Board of Directors Brian David John Duffy Gandy Hannah Chair Trustee Trustee Board Board Member Me
Slide 29: Capital investment in our showroom network supporting US growth
Capital investment in our showroom network supporting US growth Mayors, Boca Raton • Growing geographical presence with 23 multi-brand showrooms and 17 mono-brand boutiques at 1 May 2022 • Acquisition of five showrooms completed • Minneapolis, Minnesota • Plano (Dallas), Texas • Vail and Aspen, Colo
Slide 30: Capital investment in our showroom network supporting UK growth
Capital investment in our showroom network supporting UK growth Goldsmiths, Reading • Nationwide scale with 131 showrooms at 1 May 2022 • 93 multi-brand showrooms and 38 mono-brand boutiques • Goldsmith Luxury elevation • Introduced Goldsmiths Luxury concept to 7 showrooms • New Goldsmith showroom i
Slide 31: Watches of Switzerland, Kenwood Towne, Cincinnati, Ohio
Watches of Switzerland, Kenwood Towne, Cincinnati, Ohio The Watches of Switzerland Group FY22 Results, July 2022 31
Slide 32: Rolex mono-brand boutique, the Wynn Resort, Las Vegas
Rolex mono-brand boutique, the Wynn Resort, Las Vegas The Watches of Switzerland Group FY22 Results, July 2022 32
Slide 33: Mayors, Aventura, Miami, Florida
Mayors, Aventura, Miami, Florida The Watches of Switzerland Group FY22 Results, July 2022 33
Slide 34: BVLGARI mono-brand boutique, Aventura, Miami, Florida
BVLGARI mono-brand boutique, Aventura, Miami, Florida The Watches of Switzerland Group FY22 Results, July 2022 34
Slide 35: Mayors & TUDOR mono-brand boutique, Mall of Millenia, Orlando, Florida
Mayors & TUDOR mono-brand boutique, Mall of Millenia, Orlando, Florida The Watches of Switzerland Group FY22 Results, July 2022 35
Slide 36: Mayors, Boca Raton, Florida
Mayors, Boca Raton, Florida Mappin & Webb Chester The Watches of Switzerland Group FY22 Results, July 2022 36
Slide 37: Betteridge Aspen & Vail, Colorado and Greenwich, Connecticut
Betteridge Aspen & Vail, Colorado and Greenwich, Connecticut Aspen Greenwich Extension Extension • Additional 450 • Additional 2,500 sq ft secured sq ft secured on • Total 1,245 sq ft ground floor The Watches of Switzerland Group FY22 Results, July 2022 37
Slide 38: Watches of Switzerland, American Dream, New Jersey
Watches of Switzerland, American Dream, New Jersey Opening November 2022 The Watches of Switzerland Group FY22 Results, July 2022 38
Slide 39: Goldsmiths Elevation: 7 showrooms now complete with another 7 planned for FY23
Goldsmiths Elevation: 7 showrooms now complete with another 7 planned for FY23 Goldsmiths Leicester Refurbishment & expansion December 2021 The Watches of Switzerland Group FY22 Results, July 2022 39
Slide 40: Mappin & Webb Chester
Mappin & Webb Chester The Watches of Switzerland Group FY22 Results, July 2022 40
Slide 41: New development in Battersea, London
New development in Battersea, London The Watches of Switzerland Group FY22 Results, July 2022 41
Slide 42: New development in Battersea, first UK Breitling Café and other mono-brand boutiques
New development in Battersea, first UK Breitling Café and 3 other mono-brand boutiques The Watches of Switzerland Group FY22 Results, July 2022 42
Slide 43: Breitling mono-brand boutique, Stockholm with other showrooms announced in progress
Breitling mono-brand boutique, Stockholm with other showrooms announced in progress The Watches of Switzerland Group FY22 Results, July 2022 43
Slide 44: Analog:Shift - product assortment
Analog:Shift - product assortment The Watches of Switzerland Group FY22 Results, July 2022 44
Slide 45: Analog:Shift – new marketing campaign
Analog:Shift – new marketing campaign The Watches of Switzerland Group FY22 Results, July 2022 45
Slide 46: Financial Results & Outlook
The Watches of Switzerland Group Financial Results & Outlook Bill Floydd, CFO
Slide 47: Record sales and profitability
Record sales and profitability Income Statement FY22 FY21* YoY % Income Statement presented pre-IFRS 16 and pre-exceptional items (£million) Revenue 1,238 905 37% • Prior year impacted by significant COVID-19 disruption particularly in the UK Net margin 471 332 42% Net margin % 38.0% 36.7% 130bps •
Slide 48: Financial KPIs
Financial KPIs Adjusted EBIT (£m) Free cash flow (£m) Return on Capital Employed 140 120 30% 130 110 +2% 112 27.4% 120 100 25% +770bps +68% 100 19.7% 80 20% 78 80 60 15% 60 40 10% 40 20 20 5% 0 0 0% FY21 FY22 FY21 FY22 FY21 FY22 The Watches of Switzerland Group FY22 Results, July 2022 48
Slide 49: Balance sheet strength
Balance sheet strength Balance Sheet (£million) FY22 FY21 YoY % • Continued investment with £41 million of expansionary Goodwill & intangibles 178 151 18% capex (FY21: £21 million) PP&E 113 94 20% • Inventory levels +£81 million (+36%) – reflects growing Right-of-use assets 294 254 16% business and
Slide 50: Excellent free cash flow
Excellent free cash flow Cash flow (£million) FY22 FY21 YoY % Adjusted EBITDA 162 105 54% Working capital (30) 14 (314)% Free cash flow of £112m; 69% free cash flow conversion Tax (16) (10) (63)% Other 2 6 • Adjusted EBITDA increased by 54% Cash generated from operating 118 115 2% activities • Worki
Slide 51: Balance sheet strength
Balance sheet strength • Net debt reduced by £30 million to £14 million after £85m of investment Facility Expiring Amount • At 1 May 2022, the Group had a total of £218 million of UK Term Loan – UK SONIA +1.75% June 2024 £120.0m available committed facilities to +2.80% UK Revolving Credit Facility –
Slide 52: Well insulated from inflation
Well insulated from inflation Breakdown of cost base FY22 4% 7% • Product is the largest component of cost base. Gross margins are fixed – if wholesale price increases, RRP 6% increases at the same rate 11% • Payroll 11% of cost base, approximately a quarter of which is performance related 72% • Ren
Slide 53: FY23 guidance (pre-IFRS 16)
FY23 guidance (pre-IFRS 16) FY23 guidance FY23 guidance assumes: Revenue £1.45-£1.50bn • Visibility of supply of key brands with no disruption to supply anticipated Adjusted EBITDA margin flat to +0.5% • No further national lockdowns in any of the Group’s Depreciation, amortisation, impairment marke
Slide 54: Long Range Plan
The Watches of Switzerland Group Long Range Plan
Slide 55: Conclusions
The Watches of Switzerland Group Conclusions Brian Duffy, CEO
Slide 56: Conclusions
Conclusions Record performance in sales, profitability and ROCE in FY22 Demand maintaining strong momentum into FY23 Watches of Switzerland Group model enhanced and gaining market share Positive progress in all aspects of ESG Ahead of schedule on our Long Range Plan and confident in our goals The Wa
Slide 57: Q&A
Q&A The Watches of Switzerland Group FY22 Results, July 2022 57
The Watches of Switzerland Group — FY2022 Earnings Presentation on 6ix