The Watches of Switzerland Group PLC

The Watches of Switzerland Group PLC (LON: WOSG) is an FTSE 250-listed luxury watch retailer, operating in the UK and US regions.

Key Pointers

• Optimistic Outlook: WOSG entered FY23 with strong momentum as the ongoing recovery in footfall and airport traffic, has left the disruption from the pandemic behind. Therefore, the Company has a decent revenue visibility, and expects to end FY23 with a strong net cash position of £35 - £45 million.
• Decent Fundamentals: As the demand for luxury watches and jewellery remained robust, the Group revenue soared 40% YoY in FY22. Subsequently, FY22 Adjusted pre-IFRS 16 EBIT is likely to report YoY growth of +64% to +69%.
• Technical Indicator: The price of the stock is approaching the lower Bollinger band with a 14-day RSI level of ~43.47.  

Key Risks

• Persistent Inflation: British inflation hit 9% in April 2022 with rising energy prices, which can significantly impact the consumer spending towards discretionary products.
• Macroeconomic Uncertainties: The interest rate worries, the US dollar hitting two-decade peaks, and subdued economic forecasts can continue to impact corporate profits and put pressure on equity markets.

Financial Highlights (for the quarter ended 1 May 2022, as of 18 May 2022)

(Source: Company Website)

• Topline Growth: WOSG delivered a stellar end to FY22 with 48% YoY revenue growth on constant currency basis.
• Reduced Borrowings: The net debt was significantly reduced from £44 million (as at 2 May 2021) to £14 million (at the end of FY22).

One Year Share Price Chart

 (Source: REFINITIV; Analysis done by Kalkine Group)

Conclusion

WOSG was trading at 947.50 (as of 18 May 2022, at 1:30 PM GMT+1).

Following the 48% growth in Q4 FY22 and improved profitability in the full year, the Group has unveiled clear guidance for FY23, as shown in the image below:

Please note markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

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