Watches of Switzerland Group plc

So good morning and thank you for joining our presentation of the final results of the Watch the Switzerland group for fiscal year 25. You'll be hearing firstly from me, Brian Duffy, CEO of the group, then David Hurley, President of North America and Deputy Group CEO, then Craig Bolton, President UK, and finally, last but not least, Anders Romberg, our Group CFO. I'll then have some closing remarks before opening the lines for your questions. In fiscal year 25, we achieved record sales of $1.652 billion. That was plus 8% in constant currency versus prior year. And we had a stronger second half gross, achieving plus 12%. Our US division passed an important milestone, achieving sales of over $1 billion in the fiscal year. Adjusted EBIT of £150 million was 12% ahead of last year, representing an improvement in profitability of 30 bps, and we ended with a decent balance sheet. Throughout the year, we continued with our strategy of investing for profitable growth through developing our showrooms. With new points of sale for Rolex in the US, in Jacksonville and Plano, Texas. The stunning new Rolex flagship boutique here in London and Old Bond Street. Expansion of Patek Philippe in Greenwich, Connecticut. And all in all, a total of 15 showroom projects for the group. and we have an exciting program of investment projects in fiscal year 26 and 27 that you'll see from david and craig's presentations we're delighted with the acquisitions of roberto coin inc and hedinki integrations are going very well and we've great prospects for those two businesses Pre-owned both Rolex CPO program and other brand CPO have performed very well exceeding our expectations. As we have presented previously, we see significant growth potential in the luxury branded jewellery sector, particularly through Roberto Coyne, but also with other luxury jewellery brands. We have relaunched our US websites through Shopify. Watches of Switzerland is up and running and performing very well. And Roberto Coyne and Mayers will go live in the coming weeks. We see really big opportunity in the online space in the US. The luxury watch market is unique and characterised by demand exceeding supply overall, long term price inflation due to high value commodity materials and Swiss Franc denominated production costs, strict management of brand image and distribution and a relentless focus from the brands on product quality and innovation. Following many years of low growth and underinvestment, the US market started to outpace other markets from 2019 and achieved an impressive compounded average growth rate from calendar 2019 through to 24 of plus 14% annually. This compares to a US CAGR growth of 24.7% from fiscal year 20 to fiscal year 25, largely overlapping the same period. the us is now the clear number one market globally the uk market in fact is the number one market on a domestic per capita basis and has shown consistent long-term growth over many many years the uk market has grown at a compounded average growth rate of 5.1 percent from calendar 19 through 24 We have outperformed the market growth over this period with a rate of 8.1% fiscal year 20 to fiscal year 25. The chart on the right shows the comparison for the US, UK and global markets in the year to April 25 compared to 24, 23 and 22. Compared to 22, the US market in the year to April 25 has increased by an impressive 51% and the UK in the same period by 20%. Both markets outpacing the global market, which was impacted by declines in the Asian markets of Hong Kong and China. Watches and Wonders 2025, where the brands present their new developments and marketing plans, was excellent this year, as are the new products and plans presented by other brands who do not participate in the fair. We now have a new product family from Rolex, the Landweller, and more new novelties from Patek Philippe. A refocus on icons from the major brands was great to see and a clear response from most brands to the trend in both men's and women's watches of smaller case sizes. The importance of value has clearly been recognised and there are some great marketing plans for the coming year. All very, very positive. We like certified pre-owned and certified pre-owned of other brands continues to perform very well, exceeding our initial expectations. This chart shows the march of the luxury jewellery market towards branded product from unbranded product, which is the basis of our strategic focus on branded jewellery, with in particular Roberto Coyne and also other brands. Our model is working and is uniquely advantaged. We have scale, full in-house functional resources and the financial resources to support our commitments and growth plans. We have strong, very long-standing relationships with our brand partners. We are now diversified geographically and in complementary product categories of luxury watches, luxury jewellery, pre-owned watches, after sales and servicing and also now media with Hedinki. We are multi-brand, multi-facier, multi-channel and international. We are one of the largest and oldest players in our category with an extensive retail experience and a focus on client service. As presented earlier, the luxury watch market is strong, resilient and offers long-term consistent growth. Recent years impacted by the global pandemic resulted in a period of unprecedented volatility. The impact of the COVID years was a reduction in production up to 25% due to lockdown in Switzerland and an increase in demand as consumers had the disposable income and the time and inclination to shop for watches and jewellery. For a luxury watch category, this led to an increased disparity of supply and demand, resulting in a dramatic spike in secondary market prices and an excess of demand for new product. These excesses were corrected in the 2023-24 period when demand normalised, although demand was further impacted by high price increases in 2023, which impacted the UK market significantly. The US market was less impacted by price increases and has remained pretty strong throughout as presented earlier. Where we are now, we believe that brands have responded to the conditions with more modest pricing and a focus on new commercial product development and impactful marketing. Secondary market prices have now stabilised overall at above pre-Covid levels, with some key brands showing some price increases in recent months. In our experience, the UK market has stabilised in line with pre-Covid growth trends and the US continues to be strong and outperforming other geographies. We will come on to talk about US tariffs later in the presentation. If we look at our group's performance over this volatile period, we've delivered a sales CAGR of plus 13.5%, fiscal year 25 on 19, and an adjusted EBIT CAGR for this period of 19.3%. We've achieved this performance by sticking with our model and optimising our core business and adapting to new opportunities as pre-owned and branded jewellery. In terms of my key messages, we've made good financial progress and significant strategic progress. We've successfully navigated a period of unprecedented volatility. The markets we are in remain attractive. Our unique model positions us well for sustained profitable growth and out-market performance. We are pleased with our financial performance and also with our continued support and engagement with our responsibilities in ESG. We are proud that thanks to our great colleagues in the UK and US, we were accredited a great place to work this year. We are number seven in the FTSE 250 for female leadership. We are rated AAA by MSCI on ESG. And since its inception in 2021, I'm proud to say that we have now committed £8.3 million to our foundation, through which we support causes in the UK and US focusing on education and alleviating the effects of poverty. I now hand over to David, the President of North America and Deputy CEO.

Thank you, Brian. We're delighted with our continued growth in North America, having gone from no presence to $1 billion in sales in a little over seven years. This has been driven by continuous investments in talent, technology, evidenced by our e-commerce launch, investments in our showroom portfolio and acquisitions. The US now makes up 48% of our group, and we see lots of opportunities for future growth in this fragmented market. This year, we've completed a number of significant showroom projects with key partners, particularly Rolex. These include the relocation of Mare's Tampa, Florida to a much larger space, the expansion of our recently acquired Betteridge Vale showroom, relocations of Mayer's Jacksonville and Watches of Switzerland Plano, Texas, where Rolex was introduced into the brand lineup, and the conversion of our Mayer's Lennox Atlanta showroom into a Rolex boutique. In terms of showroom investments, we still see significant opportunities to grow revenue through renovations, expansions, showroom relocations, and new agencies. We have a strong pipeline of projects through FY26 and 27, which will complete the rightsizing of our existing estate. We're delighted with our new Patek Philippe salon in Betteridge, Greenwich. We are finalizing the plans for the rest of the Betteridge showroom, and we'll begin this major refurbishment during FY26. Watches of Switzerland Ross Park in Pittsburgh is an example of a new showroom we have opened that is anchored by Cartier and Omega. Both of these brands are performing strongly across our showroom network and also online. One year in, and we're even more excited by the potential of RobertoCoin than we were at the time of the acquisition. RobertoCoin has been performing well, and we're pleased to have retained an intact retail distribution network. Brian and I were in Las Vegas at the JCK Couture Show, and it was great to see the fantastic reactions to our product launches from our retail partners. We're working on a number of significant growth opportunities for this brand in the North American market. These include a focus on brand range, development and merchandising, ensuring the retail network has the right range and depth of key collections. We recently launched a marketing campaign with Dakota Johnson as global brand ambassador. This campaign has been received really positively by the press and our retail partners and will help to elevate the brand's prominence. We've developed a new in-store design and shop and shop concept that we've trialed in our mirror showrooms. We've seen a significant uplift in sales from this, and there's an opportunity to expand this through the wholesale network. We are also working closely with our department store partners and independent retailers on space expansion opportunities and pursuing monobrand boutiques. During FY26, we will also launch a new upgraded website to boost online sales. I'm pleased to share that we are progressing with three monobrand RobertoCoin boutiques in Hudson Yards, New York, Miami Design District, and Caesars Las Vegas, which will be run through a DTC model. RobertoCoin has had phenomenal success with monobrand boutiques in Europe and the Middle East, and we are excited about the elevation that these boutiques will bring to the brand in the US. Hedinki is going from strength to strength. They've just had the most successful watch in wonders, and we are also very excited about what we have coming down the line over the next 18 months. Again, similar to Roberto Coyne, we knew how influential, loved and respected Hedinki was, but we are still very pleased by the support we are seeing from the watch brands and most importantly, the wider watch community. And finally, we are continuing to develop our e-commerce business. We've recently re-platformed our WatchesofSwitzerland.com website onto Shopify, and there will be a migration of all of our other websites onto that platform. Very early performance is proving positive. We see e-commerce in the US as a significant opportunity for growth. I will now hand you over to Craig, President for the UK.

Thanks, David. I would like to focus on the significant showroom development we have been delivering here in the UK across FY25 and plans for FY26 and beyond. Let's start with the most significant project completed this year. I am extremely pleased to announce we completed the development of the new Rolex Boutique on Old Bond Street, London, opening on Friday the 14th of March 2025. This boutique is the single Rolex agency on Bond Street from what was previously four points of sale. operating across four floors in circa 7,200 square feet, including the first dedicated Rolex-certified pre-owned floor, as well as three floors dedicated to sales and hospitality, and an after-sales lounge home to six watchmakers and technicians. Let's take a look at this short video. So as you can see, it's an amazing boutique. The performance of this Rolex boutique has exceeded all expectations. We have received over 15,600 visitors in just the 13 weeks since opening. Having built an amazing team for our boutique, we engaged some months ago with Antonia Hock, an international client experience expert, to help us with our team training and delivery of a world-class client experience unique to Old Bond Street. I am extremely pleased with our results so far in terms of net promoter score and direct client feedback, particularly relating to the colleague satisfaction. We have continued the rollout of our luxury designs across a number of key locations in FY25, with significant new developments and expansions for Mappenham Web Edinburgh, Goldsmiths Milton Keynes and Cheltenham, as well as Watches of Switzerland Oxford Street. In November 2024, we expanded and more than doubled the size of our location in Fenchurch Street, London, converting the showroom to a new Watches of Switzerland. Across two floors and nearly 6,000 square feet, the showroom incorporates a large Rolex area, along with multiple branded spaces for key luxury brands, as well as the first branded Rolex certified pre-owned space. As we move into FY26, our first significant project was the completion of our joint venture with Audemars Piguet. Their AP house in King Street Manchester, the only point of sale in the UK for Audemars Piguet outside of London. Across six and a half thousand square feet, the Grade 2 listed house has been designed with the highest level of client experience in mind. offering dining facilities, VIP space, music lounge and rooftop eventing space. The client feedback in the early weeks has exceeded our expectations. Newcastle born and bred makes me very happy to be completing such a major refurbishment and upgrade to our amazing and beautiful Northern Goldsmiths showroom. The showroom is renowned for being the UK's first ever Rolex retailer back in 1919. And Rolex, along with Rolex Certified Pre-Owned, will feature heavily in this development, along with our amazing precious jewellery and luxury jewellery brands. This project completes July 2025. We are making great progress developing a first-of-its-kind mapping and web luxury jewellery boutique in St Anne Square, Manchester. This Grade 2 listed building in the heart of luxury retailing in the city will be home to the most amazing selection of luxury jewellery brands, created across 5,500 square feet of branded spaces with hospitality and bespoke eventing space. It will also include the first De Beers monobrand boutique outside of London. All of the brands in the showroom will be exclusive to Mappin & Webb in Manchester, giving us a real point of difference for our clients. The showroom is scheduled to open in September 2025. The remainder of FY26 will see us complete a number of major refurbishments, expansions and relocations in key regional locations, majority completing in the first half of FY26. This pipeline of amazing projects continues into FY27. We have agreement from Rolex to double the size of our Rolex boutique on Buchanan Street, Glasgow. This hugely successful showroom has traded beyond expectations since opening in 2019 and now requires this expansion to allow us to service an increased number of clients as well as introduce Rolex certified pre-owned in a dedicated space. And also to create a quality after sales area with in-house watchmakers. This project will commence in October 2025. Many thanks. I will now hand over to Anders, our CFO, to discuss the financials.

Thank you, Craig. Before we get into the numbers, I wanted to take a moment to provide an overview of the Group's financial framework for value creation. We operate in a market with attractive long-term structural growth dynamics, where demand continues to outstrip supply for key brands. As Brian and David talked to earlier, we have a strong track record of revenue growth, recording a CAGR of 13.5% since IPO, while growing our U.S. business to over $1 billion from a standing start in 2017. And we believe our key growth drivers will see this strong momentum continue. Likewise, our margin progression has been strong, with a CAGR of 19.3% since IPO, Our balance sheet is strong, supported by good cash flow conversion. The group has a disciplined approach to capital allocation, focusing on organic and inorganic growth, with surplus capital returned to shareholders. I will talk in more detail about our capital allocation approach later. Finally, we offer our shareholders long-term compounding returns. On to the numbers. FY25 was a year of stabilization and a return to growth in the UK, while momentum in our US business continued to be strong. Sales came in at £1.652 billion, or plus 8% in constant currency. Sales growth was driven by the US market, with growth of 16% in constant currency, despite the impact of the Q1 stock bill. Our adjusted EBIT of 150 million versus 135 million in FY24 was up 12% in constant currency, with an adjusted EBIT margin of 9.1% or up 30 basis points versus prior year. Our free cash flow was 98 million and return on capital employed was 19%. If we split the year in two halves, you can see the improving sales trend with the UK returning to growth and the US business up 19% in the second half versus the 11% in the first half. Turning to the income statement in more detail. As mentioned, group revenue at plus 8% in constant currency or plus 7% at reported rate. Net product margin percentage declined by 30 basis points due to product mix, partially offset by savings on interest-free credit. Our adjusted EBIT margin grew by 30 basis points to 9.1%, and adjusted EBIT for FY25 came in at 150 million, up 12% in constant currency. Adjusted EPS came in at 41.6 pence, or up 9% on prior year. Our balance sheet is strong. In the year, we spent 107 million pounds on the acquisitions of Roberto Coin Inc. and the Houdinki business, both of which are progressing well. Continued capital investment in our estate to elevate the network and drive future growth remains a key component of our strategy. Inventory levels were up 14%, reflecting inventory on acquisitions of 54 million. Underlying inventory levels and turns remained healthy. As a reminder, inventory is a very low-risk asset in our category. We closed the year with a net debt position of 96 million pounds, reflecting acquisition spend. A net debt to EBITDA leverage came out to 0.6 times. We continue to be highly cash generative. Our free cash flow for the year was 98 million, with a cash flow conversion of 51%. This was impacted by one-off changes to supplier payment terms, which, if excluded, would have given a cash conversion of 71%. In March, we announced the launch of this 25 million pound share buyback program, which completed in early FY26. We spent 11 million during FY25. As mentioned earlier, we have a disciplined approach to capital allocation. Our focus is on showroom investments, strategic acquisitions, and in the event of surplus capital, returns to shareholders. Showroom investments remain a key priority, offering attractive returns, and our ongoing elevation program is progressing well, as evidenced earlier by David and Craig. We have a disciplined approach to strategic acquisitions with strong focus on returns. This remains one of our key pillars for growth, particularly in the US. And were we to have surplus capital above and beyond the requirements of the business, we will return to shareholders, as evidenced by the recent share buyback program. Across the piece, we look to optimize capital deployment for the benefit of all of our stakeholders, focusing on long-term sustainable growth while maintaining financial and operational flexibility, allowing us to react tactically to opportunities. The current macroeconomic environment is volatile, making it uncertain. Our guidance for the 53 weeks of FY26 is based on current US tariff rate of 10% maintained beyond the 90 days pause. Currently announced margin changes from brand partners in response to the 10% tariff. As it stands today, the 10% tariffs on imported goods from Switzerland has led some of our brand partners putting through mid-single-digit price increases in the US, alongside reducing their authorized distribution network's margin percentage. Our view is that some brands are looking to share the tariff pain with retailers rather than passing the full cost on to the consumers. Our guidance is based on visibility of supply of key brands, which we have for the fiscal calendar year 25. Guidance also reflects confirmed showroom projects, but excludes any uncommitted capital projects or acquisitions. So we're guiding towards revenue growth in constant currency, all between 6 and 10%. Adjusted EBIT margin percentage flat to down 100 basis points on prior year, reflecting margin changes from key brand partners. Our capital expenditure is planned to come in between 65 and 75 million. The outcome of U.S. tariff developments remains uncertain. We are in regular dialogue with our brand partners, but it's too early to comment on the potential sector impact of further changes. We will provide further updates as to the potential impact on FY26 guidance once the situation becomes clear. With that, I will now hand over to Brian for some final remarks.

thank you david craig and anders and to summarize the group has performed well during the year with significant strategic progress we've continued to invest in our showroom estate and have a strong pipeline of projects through fiscal 26 and 27 with our key partners the performance of certified pre-owned has been encouraging and we have major growth opportunities for ecom in the us and luxury branded jewelry The integrations of Roberto Coyne and Hedinki have gone well and we have initiated a number of significant growth initiatives with these acquisitions. Importantly, we've continued to support the Watches of Switzerland Group Foundation, which provides essential support to local and national charities focused on poverty, social mobility, hardship and education. we have a uniquely advantaged model with attractive strategic opportunities and we are very well placed to continue to deliver profitable growth thank you we will now begin a question and answer session our first question is from Adrian de Verger from Goldman Sachs please go ahead hey good morning thank you very much for taking my questions

So the first one would be on the US market, please. Could you comment on what surprised you the most regarding the performance in the US over the last six months? And could you also comment on the exit rate and what you've been seeing in the last couple of months? The second question would be with regards to the inventory. So given the numbers we've seen for SwissWatch experts coming into the US in April, could you please comment on where you see inventory in the US? And more broadly, how do you feel about the outlook for inventory allocation across the brands? Is it in line with your expectations looking ahead for Fulia 26? Thank you very much.

OK, thanks for your question. I wouldn't say that there's too much surprising about the US market. I think the original thesis that there was a great love of Swiss watches and that demand was being um not fully potentialized because of uh another investment in retail i think that's clearly been proven to be correct um passing a billion dollars last year was a i think a real exceptional um milestone for the for a group there So we've you know it's across the US performances has been good so as I get appreciation and love for luxury watches there's a fantastic market in the US for luxury branded jewelry, which has also been very strong. And those those those wells. in America that people continue to enjoy life and indulge and respond to what we're offering of great client service and great environments and obviously representing the best brands in the market. So honestly, nothing that we would really characterize as surprising. We've got to keep working hard at it, of course we do. We keep investing, we keep training other people, we keep elevating client experience and the consumers responding very well. We did finish the year strongly. We've got really important initiatives that are going to be impacting in the year ahead, including the launch of Ecom, or the revised Ecom launch, which is off to a great start. very, very positive about Roberto coin and the potential that's there. And you heard from David, you know, important steps that were taken with the monobrand stores with, um, with econ and obviously this fantastic reaction we've had to our great Dakota Johnson campaign, very positive about that. Uh, pre-owned was a much more established market in the US and we've clearly managed to take a strong position in that. And we've got great momentum on, Rolex, CPO, and another pre-owned. So we are very happy with our progress and happy that we understand that market and how to respond to it.

As for the inventory area, obviously 8% was inflated because what the brands did, they accelerated intake to the market in expectation of tariffs. So it's not something that said the distribution network is more held by the brands themselves, and so, if you look at the US market from an inventory point of view it's it's very healthy. And you know the growth in the market over the lcm period is 15 and a half percent. So I think it's more relevant to look at it over an extended period of time than taking an isolated month. It is also important to recall that it's not, you know, this import numbers has nothing to do with what the inventory levels in the distribution network itself is. So there is no excess inventory in the market.

No. That's very clear. I think if I can just have a follow-up on growth in the U.S., Could you please comment on the growth in the USX Roberto coin?

It's not a number that we've given out, so we can't be specific on that. But as I mentioned, we have a number of growth initiatives. It's been over. We are on supply, obviously, from key brands, and that's played into our expectation. We have growth plans on the Roberto coin, but we also have important results around ecom around important projects those that we completed towards the end of the second half of the last fiscal year and others that we have planned going into this year you know the uncertainty in the market remains tariffs of course which we've made really clear we'll have hopefully clarification on that in the coming days really hopefully next week Um, but, uh, we have a, we have a number of course, and I should also say as an important one, but we have a, we have a lot of important ones as well.

Thank you very much.

You're welcome. And, um, our next question is from John Cox from Kepler Chevron. Please go ahead.

Yeah. Uh, good morning guys. Sorry. Uh, Brian, your answer there on the US, I couldn't really catch it at the start. I think there's a problem with the microphones there. So you exited or more recent trading in the US is improving, is that what you said? And I'd like to ask the same question about the UK, just trying to get a feel for the overall market. Is it the same as it was a couple of months ago or things are improving or deteriorating, you think, on an underlying basis? Second question, just in terms of the shop closures you announced in the UK, just wondering what, you know, what are your efforts there? Is it obviously to improve profitability? Just in wondering in terms of the negative impact on revenue, you know, I guess those stores are pretty low, low, low, you know, single digit million contributors at best in terms of revenue. Thank you.

Sorry, Leanne, can you hear me okay now? yeah it's not great it's like you're talking into a tunnel or something okay we've moved the night make a bit closer that's that that's yeah that's much better yeah okay so sorry you didn't hear me or you're messy out i didn't see anything about of uh of improving uh we did uh have a good second half Both UK and US, as we've reported, our only comment on current trading is it's in line with our expectation. Nothing to report on it. Good momentum, mechanic, good momentum out of last year. And that continues so far in this year. um we uh have a lot of growth initiatives in the u.s i presume you heard me say all of that around jewelry certified pre-owned ecom and a lot of great projects that we completed last year uh impacting in this year and then other new projects that we have planned to david reported so um so all good and and we've described the uk market as having stabilized following a period of really unprecedented volatility really impacted the post-Covid period and then impacted by resulting high inflationary prices impacting at a time when a UK consumer sentiment was pretty negative. So the market overall and we within that market had a tougher period, second half 23 through to 24. We see that it's largely over the market, the consumer behaving in a way that we recognise and brand partners in particular. responding as they typically do to the market conditions, really great product development, modest price increases and great marketing to support the new products that are going on. So stabilised is how we see the UK market and that's how we've projected it going forward. The closures that we did were, you know, as you described, there's very little loss of sales, actually. The agencies in those stores that we want to maintain, we have maintained and we've moved into other stores in the local geographies. So overall, you know, it is a cost saving for the year that we'll have from the store closures and no real significant impact on sales.

Okay, I want to just follow up in terms of your non-supply constrained brands. Just wondering how the environment is for those or anyone's maybe doing particularly well, maybe others for whatever reason not doing particularly well. Just in terms of your guidance, what are your thoughts about will there be a decline? Is that what you're forecasting for those non-supply? supply-constrained brands, or are you assuming flat sort of development, any sort of detail you can provide would be great, because everybody knows how great the Rolex and all of the store expansions are. It's a great story. It's just people are obviously a bit concerned more about the non-supply-constrained stuff.

Thank you. Joy, as you know, we have a really great portfolio of brand partnerships. The period I referred to, the volatile period, really impacted the price segment, sort of 3,000 to 7,000 around the brands that are in that segment. Collectively, those brands, as has been very typical of the industry, it's pragmatic, it's responsive. um the response in terms of new product development and uh and marketing has been and pricing i think has been very very good to be worked with the brands uh there's more product new product uh impact again during the covert years new products you know were subdued a bit because it was you know obviously such initially huge demand um uh going on and you know production was optimized during that time but watching wonders this year and And the other brands that are presenting new products, we were very, very pleased by. We've already had deliveries of new products and the reaction to the market's been good. So we're not calling out anything specifically with regards to those brands. And we regard today's market as very much more recognisable in terms of consumer behaviour and brand momentum.

Right. Thank you. And, and our next question is from Alison Legle from Deutsche Niemes. Please go ahead.

Morning. Thank you for taking my questions. Three, if I might, please. The first one was just on how you talked about the brands and their kind of reaction to the import tariffs and taking a bit of a price and also kind of some of the contraction on the margin. I'm just wondering if that's impacting how you're thinking about the ranging across your network in terms of those different brands where maybe you're being required to kind of take a bit more pain or maybe actually you feel like some brands are taking more price than perhaps their brands in the positions of support, kind of coming back to your earlier point in terms of more rational pricing. So just wondering if that's impacting anything there in terms of how you're thinking about the range that you're putting to consumers. And then the second one was just around supplier payment terms. So you were clear that there was a one-off change there in terms of a working capital impact. Is that at all connected to what's happening in the US and those kind of supplier brands? Or is it just a totally different kind of supplier base and completely unconnected? and then I'll come back on Roberto Coyle if that's okay.

Okay, Alison, thanks. The changes that have happened will not impact on our ranging overall. We have great brand partnerships. We manage things long-term with the brands, and there isn't anything within differentiated behavior of the brands, if you like, that would cause us to reconsider. any of that so there'll be no impact on the on arranging from the tariff

implications in terms of the payment terms it is a one-off correction by some of our network that they reduce terms in both the UK as well as in the US we view it as a one-off and it's probably linked to working capital from their side you know pushing it on to the distribution network it should normalize so our cash conversion should come back to the 70s or so in the coming year It's not connected to the tariffs, by the way.

Okay. Got it. Thank you. And then just on Roberto Coyne and maybe some of your kind of expectations and sort of plans for growth there in the year ahead, just wondering how we should be thinking about the incremental impact from those monogram boutiques, both in terms of revenue and how maybe the operating economic shift and maybe how we should be thinking about the margins of that bit of the business progressing. Thank you.

It's going to be an important year for Roberto Coin. We've just spent the last year getting to know Roberto and his family, his management in Vicenza, in Italy, and also with Peter Webster and the team in the US. getting to understand the market, the operator, and meeting a lot of the customers. Myself and David Hurley were in Las Vegas for the Couture GCK show and met many of the customers. We met quite a few last year, but we met a great deal more this year. It's a great, great brand. It's a fabulous product. It's on a great market. It's really the best market in the world for luxury branded jewellery and for jewellery overall as the US market. A great portfolio of customers and distribution. Now, we've added to that some significant investment, obviously, behind the Cota Johnson campaign. And it's a brand that clearly is ripe for elevated distribution and consumer presentation. and ripe for monobrand development. Our plans are to do monobrands directly in some cases where we are in a strong position within those markets and also we plan to do it with good branded partners that are stronger regionally through a franchise model but also upgrading the presentation and our wholesale distribution, both with our strong independent partners and the department stores, and we're doing an e-com. The three stores that David announced are all on markets that we're already strong in. One in Vegas, one in New York and Hudson Yards, and one in Miami Design District that was there already. We're just expanding the space and kind of upgrading the presentation. um the financials obviously are attractive from a margin standpoint uh because effectively we'll get combined wholesale and retail margin um and uh yeah very very excited and confident about uh about the prospects for the brand friends thank you very much thank you and our next question is from kate culvert from investec please go ahead

Morning, everyone. Just coming back on Alison's question on RobertoCoin and trying to pin you down a bit more. Should we think about RobertoCoin as being a low single-digit growth business or a mid-single-digit growth business? What sort of range of growth do you think we should be assuming for that business? And also, just from the accounting, when you start putting mono brand stores in, will that go into the wholesale line or does that go under the U.S. other bit line? as far as sales are concerned. And then my second question is just going back to the acquisition of the Ernest Jones package of stores, which you acquired a couple of years ago in the UK. Could you just update us on the sort of returns and where you are with that package of stores and the performance they achieved last year? Thanks very much.

We're not going to give you a specific, you know, help on the growth plans that we have. for Roberto next year. We did well with Roberto Coin last year. We were anticipating perhaps some reaction from the wholesale distribution, a lot of whom we compete with obviously in the watch world, but the reaction to that distribution has actually been good. So we start with a strong base, good momentum, and obviously stores are incremental, online is incremental, expanded space. and our wholesale partners department stores and otherwise but hope would be incremental so uh we've got a lot to go out but we've formulated plans i think we've gone about it and in a good way as i said earlier getting to know the people the product the market the customers well before um initiating the growth plans that we have for this year so uh we'll probably be more communicative as the year goes on um but uh we're not going to give you any further direction on the uh assume growth for Roberto at this point. On the technical accounting.

In terms of where we're going to record the sales for the monobrands, A, I mean, it remains a very substantial part of the business going through wholesale, obviously. That will go in under our US normal sales as part of the US business and not separated into the wholesale segment. In terms of the E&Y sort of returns as such, obviously when we acquired the business, it was predominantly inventory purchase. So we bought 32 million of inventory for total consideration of 47, I think it was. So the value of the asset that we acquired was nominal. And what we essentially got was the right to the agencies. That was the big win in that acquisition. So the returns overall has been really helpful and good. We haven't disclosed any specifics on it, so I'm not going to go into that level of detail.

And this allowed us, Kate, to rationalise distribution and presentation in a number of the regional markets around the country. So it's been a positive step for us and I think, honestly, a positive step for the market overall.

Just follow up with one other question. You're sounding quite positive on the innovation that's coming through for PEAK. Do you think the balance or mix between the entry higher end sort of watch price points is back to normal. And the innovation is sort of back to pre-COVID levels.

I think, yes, the impact on new products, maybe even a wee bit better, you know, because there was a bit of catch up to do. I think new products didn't get the same sort of featuring during this, you know, volatile COVID influence period. So it's just, you'll see the products, we announce them, you'll see them, you see them from the brand, you see them from us. And it's a great combination. of um new product excitement supported with uh with great marketing um so it's yeah positive for sure um and we are obviously working with the brands very closely on product launches and uh and you know copies of activity whether it's advertising or events or um you know online activity and so on so um all goods um and good for the market and as i've said a few times very much more recognizable versus this you know period that uh that we've that we've come through much thanks kate thank you and as a reminder to ask a question of the phone please signal by pressing star one you may also submit your questions about the webcast

Our next question is from Melania Grippo from BNP Paribas Exxon. Please go ahead.

Good morning, everyone. This is Melania Grippo from BNP Paribas Exxon. I have two questions. First question is on your CPO business. You mentioned that the certified pre-owned is growing very strongly with Rolex becoming the number two watch brand. I was wondering if there is any significance, any difference in the UK versus the US if you plan to add further locations for Rolex and the other CPO stores. And, you know, what is your, you know, what do you believe is the number that you can achieve there? And my second question is on the online, if you can please remind us what it represents. Thank you.

So CPO, I mean, the pre-owned market was always and remains much more developed in the U.S. And that's been reflected relative development of that category as well. Remind you that we did acquire expertise in the category when we acquired Analog Shift. and it's around the team and analog shift that we've really developed Rolex, CPU and other pre-owned. So with a great expertise and a very good market in the US and great momentum. The UK, having said all of that, has also and proportionately has done from where they came, I think even better. And again, we've set up all of the logistics for procurement and handling logistics between us and Rolex and back to the market. We've got in again some expertise in the category and it's been a great business development for us. In terms of changes and momentum and other positive impacts, we are implementing Steve Tombs, From from Rolex directly, but you know window and store furniture we're investing you know more and supporting the business online. Steve Tombs, and.

a number of things i think just driving the momentum ahead and what is you know clearly a very significant category for us overall online in terms of online first as a reminder half of our business is not transactional online because rolex and patek doesn't allow us to do that so so that that's just to put things into context so our online business is around six percent or so of our business overall and and growing And we have high expectations in the US, as Brian alluded to earlier. So we're in the early stage there. We still need to integrate the Houdinki traffic into our network, which we're working on. So that will happen throughout the next quarter or so. So we really look forward to that.

Thank you.

Thank you. And are there any further questions over the phone? I will hand over for any webcast questions. Over to you, Danielle.

Thanks, Sergei. So we do just have time for some questions from David Hughes from Shaw Capital. Firstly, for the growth expectations for FY26, how much do you expect in the US versus the UK? Secondly, do you have a number in mind for the number of doors in the US? And thirdly, what are the moving parts in your guidance between the negative 100 basis points and the flat EBIT margin?

Yeah, I mean, we'll apologize to David if he's listening, but we haven't given, we never do give the split by regional market overall. So we just give our overall guidance for our group for fiscal year 26. We have fewer doors, obviously, in the US, but they're bigger, they're highly productive. There's scope for expansion in the US with new developments that are going on with underserved markets and potential from acquisition. I think if you look at our track record of how we've grown, we would hope to continue to still have those same levers of growth, which would include door expansion. But we've never been public on saying this is the overall objective. uh quite honestly it's kind of hard to determine in any event the opportunities are there uh but we've got to get got to do the deals we've got to get the support of our brand partners and we've got to execute and we carry on doing all of that and we will expand doors um in in the us but uh we've never given a specific number

In terms of the margin question, obviously, you know, if you hit the upper end of sort of our revenue guidance, you get operating leverage as a result. So that would obviously bring you closer to flat. At the lower end, you would experience less leverage and therefore you would have more deterioration on your margin.

Thank you. And with that, I'd like to hand back to you, Brian, for closing remarks.

Okay, thanks, Danielle. Thanks, everybody, for joining and your questions. You know, we're feeling good and upbeat as you're two months into this new fiscal year, as we've described the market conditions that we're in. We feel good about the US market strong, the UK market stabilised. It's all notwithstanding whatever might happen in tariffs, which I think we've made very, very clear. Our model clearly is working, it's advantaged overall, it allows us to outperform the market as we've consistently done now over well over a decade and we continue to do that. Exciting growth plans ahead, we've got great projects, we've got the projects that we completed and Last fiscal year, for example, Bond Street and the Lenox in the US, the Patek Salon in Connecticut and so on. Some great projects we completed last year, fully impacting on this year. A number of great projects that we have in the pipeline that we presented to you for this year. CPO, we talked a good bit about, great momentum behind it. We love the business and we continue to expand. Ecom in the US. I think is a really exciting opportunity that we will develop over the next few years. RobertoCoin is a great brand and we think there's really great potential behind it and we've outlined all of the plans that we have there and beyond RobertoCoin other potential planned growth in jewellery, including the opening of our store in Manchester, which will happen in September. So we feel good and upbeat about the year ahead. And thank you for joining us again. Thanks for your support. And a huge thank you to our team for having navigated through this period that we've had and for everything that they're doing keep our clients very happy. Thank you.