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1. Company Snapshot

1.a. Company Description

Watches of Switzerland Group PLC operates as a retailer of luxury watches.The company offers luxury watches and jewelry; fashion and classic watches and jewelry; and gifts, as well as provides servicing, repairs, and insurance services for fashion and classic watches and jewelry.It operates 131 showrooms in the United Kingdom and 40 showrooms in the United States, as well as through seven transactional websites under the Goldsmiths, Mappin & Webb, Watches of Switzerland, Mayors Jewelers, and Betteridge brands.


The company was founded in 1775 and is headquartered in Leicester, the United Kingdom.

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1.b. Last Insights on WOSG

Negative drivers behind Watches of Switzerland Group plc's recent performance include the UK market's challenges, with the FTSE 100 index experiencing declines amid weak trade data from China, highlighting concerns over global demand. The company's fair value estimate is UK£6.28, indicating a 42% undervaluation, according to the 2 Stage Free Cash Flow to Equity model. Additionally, the UK market's recent decline has led to a 49.6% undervaluation of some stocks, including Watches of Switzerland Group plc. Furthermore, the company's stock is considered a penny stock, which may be perceived as a negative factor by some investors.

1.c. Company Highlights

2. Transcript Summary

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3. NewsRoom

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US demand keeps Swiss watch sales ticking despite hefty tariffs

Dec -04

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Watches of Switzerland Posts Higher Earnings Helped by U.S. Growth

Dec -04

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How Recent Developments Are Shaping the Watches of Switzerland Investment Story

Nov -29

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UK Penny Stocks Spotlight: ITM Power And 2 Promising Picks

Nov -26

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Swiss Franc, Watchmakers Rise on Hopes for Tariff Cut

Nov -11

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Swiss Franc, Watchmakers Rise on Hopes for Tariff Cut

Nov -11

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How Recent Analyst Shifts Are Changing the Story for Watches of Switzerland Group

Nov -02

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Why Analysts See a Changing Story for Watches of Switzerland as Growth Prospects Improve

Oct -18

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.67%)

6. Segments

Luxury Watches

Expected Growth: 9%

Strong brand portfolio, increasing online presence, and strategic partnerships drive growth in Luxury Watches segment. Rising demand for luxury goods, particularly in Asia, and limited edition releases also contribute to 9% growth. Additionally, Watches of Switzerland Group's omnichannel approach and investment in customer experience enhance sales.

Luxury Jewellery

Expected Growth: 7%

Strong brand portfolio, increasing online presence, and strategic store openings drive growth in Luxury Jewellery segment. Rising demand for luxury goods, particularly in Asia, and effective marketing campaigns also contribute to 7% growth. Additionally, Watches of Switzerland Group plc's focus on omnichannel retailing and personalized customer experiences enhance sales.

Other

Expected Growth: 6%

The 6% growth of Watches of Switzerland Group plc's 'Other' segment is driven by increasing demand for luxury accessories, strategic partnerships with high-end brands, and expansion into new markets. Additionally, the company's focus on omnichannel retailing and investment in e-commerce capabilities have contributed to the segment's growth.

7. Detailed Products

Luxury Watches

High-end timepieces from renowned brands such as Rolex, Patek Philippe, and Audemars Piguet

Fashion Watches

Stylish and affordable timepieces from brands like Fossil, Skagen, and Daniel Wellington

Jewellery

Fine jewellery pieces from brands like Links of London and Mappin & Webb

Services

Watch repair, maintenance, and restoration services for luxury timepieces

Pre-Owned Watches

Certified pre-owned luxury watches from brands like Rolex and Omega

8. Watches of Switzerland Group plc's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Watches of Switzerland Group plc is medium, as there are alternative luxury watch brands available in the market, but the company's strong brand reputation and customer loyalty mitigate this threat to some extent.

Bargaining Power Of Customers

The bargaining power of customers is low, as Watches of Switzerland Group plc operates in a niche market with a loyal customer base, and customers have limited bargaining power due to the luxury nature of the products.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium, as Watches of Switzerland Group plc relies on a few large suppliers for its luxury watches, but the company's strong relationships with these suppliers and its diversified supplier base mitigate this risk.

Threat Of New Entrants

The threat of new entrants is low, as entering the luxury watch market requires significant investment and expertise, and Watches of Switzerland Group plc's strong brand reputation and established distribution network create barriers to entry.

Intensity Of Rivalry

The intensity of rivalry is high, as Watches of Switzerland Group plc operates in a competitive market with several established luxury watch brands, and the company must continually innovate and differentiate itself to maintain its market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 26.29%
Debt Cost 5.75%
Equity Weight 73.71%
Equity Cost 14.22%
WACC 11.99%
Leverage 35.67%

11. Quality Control: Watches of Switzerland Group plc passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Bijou Brigitte

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Growth: 4.0

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Yield: 8.1

Momentum: 7.0

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Moonpig

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A-Score: 3.5/10

Value: 6.9

Growth: 6.4

Quality: 3.3

Yield: 0.0

Momentum: 2.5

Volatility: 2.0

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Quality: 4.7

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Momentum: 4.0

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Musti

A-Score: 2.8/10

Value: 3.0

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Quality: 2.1

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A-Score: 2.5/10

Value: 5.4

Growth: 1.1

Quality: 1.5

Yield: 2.5

Momentum: 2.5

Volatility: 2.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

4.99$

Current Price

4.99$

Potential

-0.00%

Expected Cash-Flows