Though its wares are distinctly up-market, Watches of Switzerland (WOSG) has had to contend with the same disruption to normal trading activities experienced by less salubrious retail outfits. Some of the most dramatic effects of the global response were evident in the first quarter of FY2021, in which the group’s outlets were open for only 38 per cent of the potential trading hours.
Group revenue for the 13 weeks to 26 July contracted by more than a quarter to £151m. Sales fell off a cliff in May, though they flatlined through June and recorded a 7.4 per cent year-on-year increase in July. The outcome trumped management expectations, while the consequent surge in the share price indicates that the market was also pleasantly surprised.
Indeed, the 14 per cent increase in adjusted cash profits for the 52 weeks to 26 April was also ahead of the consensus estimate and was achieved despite an 85 per cent drop in sales for the final six weeks of its financial year. The profit margin held firm as a proportion of sales, but overheads ticked up due to increased marketing commitments and costs linked to the opening of its National Watch Service Centre.
Goldman Sachs has increased its April 2021 EPS forecast from 6.99p to 15.25p, rising to 20.47p in FY2022.
| WATCHES OF SWITZERLAND (WOSG) | ||||
| ORD PRICE: | 311.5p | MARKET VALUE: | £ 746m | |
| TOUCH: | 306-312p | 12-MONTH HIGH: | 397p | LOW: 171p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 1558 | |
| NET ASSET VALUE: | 83p* | NET DEBT: | £435m | |
| Year to 26 April | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018** | 631 | 7.20 | 0.40 | nil |
| 2019 | 774 | 20.1 | 7.60 | nil |
| 2020 | 811 | 1.49 | 0.20 | nil |
| % change | +5 | -93 | -97 | - |
| Ex-div: | ||||
| Payment: | ||||
| *Includes intangible assets of £154m, or 64p a share ** Pre-IPO | ||||
