- Sales Growth: H1 sales rose to GBP 845 million, +10% in constant currency, driven by 20% US growth and 5% UK increase.
- EBIT Expansion: EBIT reached GBP 69 million, +6% year-on-year in constant currency, reflecting operational efficiency.
- Free Cash Flow Surge: Free cash flow hit GBP 48 million, a 71% improvement compared to the prior year.
- Buyback Program: GBP 25 million buyback completed, with GBP 14 million spent in H1, enhancing shareholder returns.
- ROCE Improvement: Return on capital employed rose 80 bps to 17.3%, highlighting stronger capital utilization.
Operational Highlights
The company has been actively investing in showroom expansion and refurbishment, completing 8 projects in the half year with an investment of GBP 37 million. Certified Pre-Owned (CPO) has been a strong business, with Rolex CPO becoming the #2 brand in both the U.K. and the U.S. E-commerce grew 17% in constant currency, driven by a strong performance in the U.S. The company also completed a GBP 25 million buyback program, with GBP 14 million spent in the first half.
Growth Initiatives
The company has ambitious plans for growth initiatives, including Roberto Coin, Hodinkee, and CPO. Rolex CPO is expected to reach 20% of Rolex sales in the U.S. and 10% in the U.K. by FY '28. The company is also expanding its mono-brand stores, including Hudson Yards in New York, Forum Shops and Caesars in Las Vegas, and Miami Design Center, set to open in January.
Valuation and Outlook
With a P/E Ratio of 21.94 and an EV/EBITDA of 8.71, the company's valuation appears reasonable considering its growth prospects. Analysts estimate next year's revenue growth at 6.2%, which is slightly lower than the company's guidance for FY '26 sales growth of 8%. The company's ROCE was up 80 bps at 17.3%, indicating improving profitability. As the company continues to expand its presence in the U.S. and U.K. markets, its strong pipeline of projects and growth initiatives are expected to drive future growth.
Regional Performance
The U.S. market is performing well, driven by Rolex, Rolex CPO, and other brands like Cartier. The U.K. market has been volatile but has stabilized, with growth of 5% in the first half. The company's e-commerce proposition in the U.S. market is currently dilutive but expected to be accretive long-term.