Watches of Switzerland PLC (LON:WOSG) shares moved higher on Tuesday as the retailer appears to be ticking along quite nicely judging from its interim results.
The luxury watch stores group, which also announced the acquisition of four new showrooms, said adjusted profits more than doubled to £26.5mln. Forgetting the financial finagling, underlying earnings, also known as EBITDA, were up 23.5% to £41.2mln, reflecting a rise in operating profit margins to 9.6%.
The performance was achieved on a 17.3% lift to turnover to £428.7mln, with luxury watch sales 85% of total revenues. Rolex demand continued to outstrip supplies, WoS said.
The company’s June IPO brought in net proceeds of around £148mln, the majority of which was used to pay off debts which at the October 27 period-end stood at a ‘net’ £92.1mln (down from £235mln).
The company also generated net cash of almost £50mln.
In a separate announcement, WoS said it was paying almost £32mln for showrooms in Stratford, Brent Cross, Kingston and York from Fraser Hart. The operations turned over £25.7mln last year.
In a note to clients following the numbers, analysts at Barclays raised their pre-tax profit forecasts by 2% for 2020 and 7% for 2021, upped their target price for Watches of Switzerland shares to 360p from 325p and reiterated an 'overweight' stance on the stock.
In late morning trading, Watches of Switzerland shares were 0.2% higher at 324.60p.
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