Despite choppy stock market conditions and an inhospitable retail backdrop, London’s latest IPO, Watches of Switzerland (WOSG), has successfully priced its shares at the top end of the range.
The luxury watch-to-prestige jewellery retailer, the UK’s biggest purveyor of Rolex watches, is not only a leader in attractive and growing luxury watch markets with a resilient bent, it is also delivering profitable growth under the guidance of chief executive officer (CEO) Brian Duffy, hence a positive reception to the float.
TIMEPIECES PLAY TICKING HIGHER
The high-end timepieces specialist set its offer price at 270p, valuing the company at £647m at the start of conditional dealings on the Main Market this morning. The shares have ticked up an encouraging 15% to 309.6p early on.
Watches of Switzerland has raked in £155m of new money (gross), which it will use to reduce debt, although selling shareholders have taken money off the table too, with unconditional dealings expected to begin on 4 June.
WHAT IS WATCHES OF SWITZERLAND?
Established in 2007, Watches of Switzerland is the UK’s leading luxury watch retailer and has also entered the significant, yet underdeveloped, US market, where it sells brands including Rolex, Cartier and TAG Heuer.
Accelerating like-for-like sales growth in the fourth quarter of the year to April 2019, supported by a significant marketing campaign to promote stores in Las Vegas and New York, contributed to a record full year performance.
In the UK, where it trades through Watches of Switzerland, Goldsmiths and Mappin & Webb outlets as well as online, the company had a 35% share of the luxury watch market by sales in 2018. Significantly, its Mappin & Webb brand currently holds appointments as ‘Jewellers, Goldsmiths and Silversmiths’ to The Queen and ‘Silversmiths’ to The Prince of Wales.
Watches of Switzerland, which also manages dedicated ‘mono-brand boutiques’ in partnership with Rolex, TAG Heuer, Omega and Breitling, also boasts a leading presence at Heathrow airport.
Among its key strengths is the group’s status as the largest retailer in the UK for Rolex, which is the largest luxury watch brand in the UK by sales and is growing at a steady clip. Watches of Switzerland became the first authorised UK retailer of Rolex watches in 1919 and celebrates its 100th anniversary with the brand this year.
DUFFY IS DELIVERING
The IPO is expected to boost Watches of Switzerland’s profile and brand recognition with customers, suppliers and employees, provide access to capital to grow the business and further improve the ability to recruit and retain key management and staff.
Under the leadership of Duffy, whose C.V. includes stints on the boards of Ralph Lauren, Sara Lee and Glasgow-based football giant Celtic (CCP:AIM), Watches of Switzerland has been transformed in the past five years. It has achieved strong and sustained profitable growth, improved operating margins and delivered strong returns on invested capital.
Duffy insists the IPO ‘marks the next phase in our growth story’ and is ‘delighted by the reaction we have received from the market to our business and the significant opportunities that lie ahead.’
Shares plans to take an in-depth look at Watches of Switzerland in time. The global luxury watch market is certainly a structurally attractive one, underpinned by favourable, long-term growth in both price and volume.
Furthermore, as Watches of Switzerland points out, ‘luxury watches are durable assets with outsized demand compared to supply, limited discounting, limited seasonality and significant brand pricing control’.
