# Watches of Switzerland Group outlines strategic growth plan for FY24 to FY28

- Link: https://www.directorstalkinterviews.com/watches-of-switzerland-group-outlines-strategic-growth-plan-for-fy24-to-fy28/4121132132
- Published: 2023-11-07T08:04:54+00:00
- Author: Amilia Stone

World’s largest luxury watch retailer, Watches of Switzerland Group plc (LON:WOSG)
has outlined its strategic growth plan from FY24 to FY28.

> **Brian Duffy, Chief Executive Officer, said:**
> “I am excited to present our Long Range Plan to FY28. It represents our strategy
> over the next five years to capitalise on our leading market positions and the
> unique growth opportunities available to us as the world’s largest luxury watch
> retailer.
> “The Group is stronger than it has ever been, and we are tracking well ahead of
> the original plan we outlined in 2021, with a diverse pipeline of projects already
> scheduled for FY24, FY25 and FY26, which includes our strongest ever pipeline 
> of committed Rolex projects. Our longstanding brand partnerships, leading multichannel
> capabilities, sophisticated marketing, and exceptional client service elevating
> the luxury experience truly sets us apart.
> “Today’s Long Range Plan demonstrates our confidence in more than doubling our
> sales and profits from FY23 to FY28, aiming to surpass the milestone of £3bn in
> revenue whilst driving operational leverage and accelerating new showroom projects
> and M&A activity.
> “We are excited by the opportunity available to us in the Pre-Owned market, particularly
> from the new Rolex Certified Pre-Owned programme, which we expect to deliver 20%
> of new Rolex in the US and 10% in the UK by FY28.  Analog:Shift/Non-Rolex Certified
> Pre-Owned is expected to deliver sales CAGR of more than 35% and 25% in the US
> and UK respectively.
> “We also see significant growth potential in the luxury branded jewellery market
> and we are now perfectly positioned to apply our market leading luxury watch model
> and expertise in elevating luxury brands to this growing category, which we expect
> to comprise a substantially larger share of our total revenue as we expand our
> offer and leverage partnerships with US megabrands.
> “We are very proud of what we have achieved in the last three years and have set
> ambitious though attainable goals for the Long Range Plan.  The plans are built
> on a number of specific growth opportunities, and we are confident in our ability
> to deliver these objectives.”

**Proven track record of delivery**

·      **_Long-term track record of sustainable profitable growth from FY15 to FY23:_**

**_–      _** Revenue CAGR +19.3%

**_–      _** Adjusted EBIT CAGR +43.6%

**_–      _** Return On Capital Employed (ROCE) of 27.9%, FY15 to FY23 increasing
by +21.2%

·      **_Unique WOSG model proven to work in all our chosen markets_**

**_–      _** Firmly established leadership position as leading retailer of luxury
watches in the UK

**_–      _** On track towards building leadership position in US market since entry
in 2017; revenue CAGR of +40% from FY20 to FY23, making up 42% of the Group revenue
in FY23

**_–      _** Positive start to growing presence in European market since entry 
in 2022; nine mono-brand boutiques across four countries

·      **_Performance significantly ahead of original Long Range Plan announced 
in July 2021_**

**_–      _** FY24 sales c£200m ahead of the original Long Range Plan on a straight-
line basis (at mid-point of guidance). Reflects CAGR growth of +23% vs +18% in the
original Long Range Plan

**_–      _** Adjusted EBIT CAGR +32% vs +25% in the original Plan

**Long Range Plan highlights**

·      **_Long term targets_**

·      **Group sales to more than double from FY23 base, surpassing £3bn milestone
by the end of FY28**

**_–      _** UK and US growth ahead of market

**_–      _** US revenue CAGR growth 20-25%

**_–      _** UK revenue CAGR growth 8-10%

**_–      _** Europe to be 4-6% of Group sales in FY28

·      **More than doubling Adjusted EBIT from FY23 base by end of FY28, +50 to 
150bps margin improvement by the end of the Plan**

**_–      _** UK and US growth plans to be key drivers

**_–      _** A sustained growth in average selling price (ASP)

**_–      _** UK and US showroom productivity improvements

**_–      _** Mix benefits as US becomes the largest portion of the Group

**_–      _** European productivity and profitability improvements

·      **_Expanding into new growth opportunities_**

·      **Pre-Owned**

**_–      _** Global Pre-Owned watch market growing and stronger in western markets
and online, representing a major growth opportunity for the Group in UK and US

**_–      _** Rolex Certified Pre-Owned provides additional growth platform.  To
deliver 20% of new Rolex in the US and 10% in the UK by FY28

**_–      _** Following US success, planned launch of Analog:Shift in UK

**_–      _** Analog:Shift/Non-Rolex Certified Pre-Owned expected to deliver sales
CAGR of more than 35% and 25% in US and UK respectively over the life of the Plan

·      **Luxury branded jewellery**

**_–      _** Luxury branded jewellery category is dynamic with long-term double-
digit growth.  Our Group is currently underdeveloped in this exciting category

**_–      _** Significant opportunity to leverage WOSG’s proven model in elevating
luxury brands to expand offer and leverage partnerships with luxury jewellery brands

**_–      _** Opening dedicated Mappin & Webb luxury branded jewellery showroom 
in FY25 in Manchester which includes De Beers’ first boutique outside of London

·      **_Leveraging existing growth opportunities_**

·      The Group will continue to drive growth from existing opportunities, including:

**_–      _** Showroom upgrades across the Goldsmiths, Mappin & Webb, Watches of
Switzerland, Mayors and Betteridge estates

**_–      _** Mono-brand boutique productivity enhancements

**_–      _** Ecommerce development and investment in the US and launch in Europe

·      The Group will capitalise on exciting existing and new market-specific activity,
including:

**_–      _** US: targeted acquisitions and new showroom projects including new 
Rolex boutique Plano, Texas and One Vanderbilt, New York, and targeted acquisitions

**_–      _** UK: new showroom projects including Rolex Old Bond Street boutique
and Audemars Piguet Townhouse, and acquisition of 19 luxury watch showrooms from
Ernest Jones

**_–      _** Europe: new showroom projects and targeted acquisitions; first Watches
of Switzerland multibrand in the region, marking the Group’s entry into the Netherlands;
launch of ecommerce

**_–      _** Indicative range of £350m to £500m capital investment by end of FY28
to support new project and acquisition plans

·      **_Consistent, sustained capex to support growth plans, with strong ROCE_**

**_–      _** Indicative range of cumulative capex spend from £300m to £350m by 
end of FY28

**_–      _** Good Return on Capital Employed driven by expanded EBITDA

**_–      _** Showroom upgrade program completed during the life of the Plan which
will reduce capital intensity in later years of the Plan

**_–      _** Working capital investment in jewellery and Certified Pre-Owned to
drive sales and market share

·      **_Cash generation and capital allocation_**

**_–      _** Strong free cash flow generation to fund organic and inorganic growth
from existing facilities; free cash flow conversion 65-70%

**_–      _** Investment in working capital to support sales growth

**_–      _** Priority for capital allocation remains funding business growth through
investment in showroom elevation, new projects and acquisitions

**_–      _** Decisions about allocation of surplus to be taken at the appropriate
time

**Notes**

Adjusted EBIT is EBIT before exceptional items shown on a pre-IFRS 16 basis

Return on Capital Employed is defined as Adjusted EBIT divided by the average capital
employed, calculated on a Last Twelve Month (LTM) basis.  Average capital employed
is total assets less current liabilities excluding IFRS 16 lease liabilities

**Presentation**

Watches of Switzerland Group CEO, Brian Duffy, and CFO, Anders Romberg, will be 
joined by leaders of the business to host a presentation on the Group’s Long Range
Plan at 2.00pm (UK time) today, which can be accessed via the following details:

Webcast link: https://stream.brrmedia.co.uk/broadcast/6544b9a36eba922222a2e0e7  

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