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Watches of Switzerland raises full-year expectations after strong quarter

Revenue is now forecast to come in at £880mln-£910mln, up from £840mln-£860mln previously

Watches of Switzerland Group PLC - Watches of Switzerland raises full-year expectations after strong quarter

Watches of Switzerland Group PLC (LON:WOSG) has raised its full-year guidance after enjoying a strong second quarter.

In a trading update, the FTSE 250-listed retailer said its revenue is expected to come in at £880mln-£910mln, up from a £840mln-£860mln estimate previously, while its underlying margin is estimated to be 1,0%-1.5% as opposed to flat.

READ: Watches of Switzerland achieves year-on-year sales growth since post-lockdown reopening

Net debt will be reduced to £80mln-£100mln rather than £90mln-£110mln, the group added.

In the 13 weeks to October 25, 2020, Watches of Switzerland said its revenue jumped by 20% to £202mln, with its UK performance driven by strong domestic sales offsetting lower tourist and airport business, and regional stores outperforming London sites.

Momentum in the US continued to accelerate, while new product launches have also been stronger than anticipated with a positive influence on sales, it added.

“Our guidance for the balance of the fiscal year assumes that the positive trend experienced in the second quarter will be moderated by the impact of pandemic related retail disruption in the UK and the US and uncertainty in the US economy, impacting mainly in the third quarter,” Watches of Switzerland chief executive Brian Duffy said in the statement.

"We think that the company strategy of selective refits to stores, together with its proprietary CRM system to target consumers will aid further growth," analysts at Shore Capital noted. 

"In our view, this is a management team executing its strategy well and adapting to the unprecedented market conditions."

Shares shot up 20% to 400p early on Tuesday.

--Adds analyst comment, shares--

Quick facts: Watches of Switzerland Group PLC

Price: 490 GBX

LSE:WOSG
Market: LSE
Market Cap: £1.17 billion
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