By Scott Kanowsky
Investing.com -- Watches Of Switzerland Group PLC (LON:WOSG) posted first half revenue roughly in line with expectations thanks to strong demand and higher prices for the group's luxury timepieces.
The top-line figure for 26 weeks ended on October 30 came in at £765.2 million (£1 = $1.2376), a rise of 31% compared to the same period last year. This was only just below Bloomberg consensus estimates of £766M.
The British retailer of brands like Rolex and Patek Philippe, which also operates in the U.S. and Europe, said it was boosted by increased sales volumes and average selling prices for its high-end watches. The segment's revenue expanded by 31% to £667M.
Demand at its smaller jewelry division also surged in the U.S., although sales in Britain were flat versus the prior year. The unit's total revenue jumped by 38% to £56M.
But free cash flow dipped to £55.6M, down from £102.3 year-on-year, driven by an uptick in inventory levels stemming in part from acquisitions and foreign exchange impacts. Like-for-like showroom inventory also moved up ahead of the company's key holiday trading season.
Analysts at Jefferies took note of the decrease in free cash flow, but said that the company still expects cash conversion to improve by the end of the fiscal year.
Shares in Watches Of Switzerland fell in morning dealmaking on Wednesday. They have dropped by more than 34% over the past one-year period.
Looking ahead, the firm said trading in the first six weeks of its third quarter is in line with its current expectations. It also backed its annual guidance for adjusted earnings before interest and taxes of between £163M to £175M on revenue in the range of £1.5B to £1.55B.
"We believe that the strength of the luxury watch and jewellery categories, the unique supply/demand dynamics of luxury watches and client registration lists, our portfolio of leading brand partnerships, and the success and agility of our model will continue to support long term sustainable sales growth," Watches of Switzerland said in a statement.