Having listed on the main market in June, Watches of Switzerland (WOSG) seems to be ticking along nicely. Adjusted cash profits rose by 18 per cent to £68.8m for FY2019. Accounting for 82 per cent of group sales, luxury watch revenue surged by 28 per cent to £631m, with average selling prices increasing in the UK and US by 10 per cent and 5 per cent, respectively. Having said that, the deliberate shift towards luxury products has dampened the net margin by 0.4 percentage points to 37.5 per cent.
With £34m of capital expenditure to expand the showroom portfolio, cash flow swung to negative £15m. But “4-wall” cash profits – considered a direct measure of showroom profitability – increased by almost a quarter to £118m. Meanwhile, improved debtor management and a fall in inventory days boosted cash generated from operations by 37 per cent to £70m.
Year-end net debt of £241m has reduced to £135m post-period with the benefit of IPO proceeds and refinancing. This has reduced the ratio of net debt to adjusted cash profits to a more comfortable two times.
Barclays anticipates adjusted pre-tax profit of £54m and EPS of 19.6p for April 2020, rising to £67m and 22.3p in FY2021.
| WATCHES OF SWITZERLAND (WOSG) | ||||
| ORD PRICE: | 295p | MARKET VALUE: | £707m | |
| TOUCH: | 290-294p | 12-MONTH HIGH: | 315p | LOW: 265p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 14 | |
| NET ASSET VALUE: | 32p* | NET DEBT: | 304% | |
| Year to 28 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018** | 631 | 7.2 | 0.4 | nil |
| 2019 | 774 | 20.1 | 20.9 | nil |
| % change | +23 | +181 | +5125 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £128m, or 53p a share **Year to 29 Apr, pre-IPO | ||||
