You're listening to Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. You might recall last year when several luxury watchmakers cut back on production. Brands including your Mas, Rolex, UH and other's temporarily halting production last year mid the pandemic. It was basically helping to ease a supply glut as consumers stop buying amid the health crisis. Makes sense. Well, one voice that we've turned to for updates on the luxury watch market is
Brian Duffy, his CEO of Watches of Switzerland Group. The company, by the way of reporting earnings earlier today, operating profit did meet analyst estimates. Company also laying out a five year plan to accelerate strategy, and we're going to talk about that and the A d R s of that company that trained the U s. They're up more than so far. Here in Brian joining us from London. Brian, nice to have you back. How are you. I'm very good,
thank you? And how are you. I'm doing well. Uh, feeling like things are getting a little bit back to normal, actually a lot back to normal. How does it feel for you the same you know those Um, you know, big announcements been made in the UK. We've got what we're calling Freedom Day coming up in the July nineteenth, when all of the you know, employeed restrictions in life pretty much are removed. So we are the lights not
at the end of the tunnel. It's it's pretty close and there's a lot of feel good overall in the country, so we think the end is near. What's been this horrendous period? Yeah, exactly. UM, and I do wonder what are you seeing in terms of consumers specifically, and how does it compare. I mean, we talked with you in last October, which was a tricky time to say the least. Um, how how have things improved? What are you seeing in
terms of trends. We are seeing very strong trends actually, um, and uh the UK we you know, we reported as you said, they Live reported or our year in the UK we were up three point six percent last he had despite our stores been closed for twenty six weeks of the year, which is kind of amazing. Our stores reopened again in April April twelve, and since then business has been very very buoyant. Um, there's obviously accumulated disposable
income and our category. I think it's a very attractive option for for people wanting some retail therapy and they feel good. The US has been extraordinary in last year or your ear sales and dollars. We're up there eight and a half percent in the US, despite you know, traffic being down, you know your own Manhattan. It's great to year, it's getting back to normal, but it's been really quiet now for the last you know, fifty and eighteen months. Um, But we've done well in New York.
We've done well in Vegas where again no conventions and you know, a bitter little tourism, and our teams have just on a tremendous job of reaching out to clients. Um. We obviously have products, but the clients wants, so we're all to reach out to points and still manage to transact. Businesses down in Florida and Georgia were less affected by traffic reductions, traffic down, but more like business as usual, and they've done well too, so they're clearly very very
strong consumer demand. In the US, there seems to be a real resurgence of a luxury actually expected to continue or get you know, improve even more as you know, economies continue to open. We we are very relation optimistic. We think it will continue. There's obviously a lot of you know, money in the system of stimulate, how the elves accumulated savings, and they clearly as a feeling in everybody's part that they want to feel good again and enjoy themselves. So we think it's going to be a
great holiday season. For example, we were all deprived completely of a holiday season last year and you know, time with families and having fun and enjoying yourselves. So we do think that that we are going to see a sustaining period of significant grow was um and that's at good experiencing so far in terms of you know, it's interesting what you said have you had you know, you did well in Vegas. You talked about your teams reaching
out to clients. Specifically, how much of what you saw during the pandemic in terms of sales were existing clients people who knew you knew what they were getting. So if people were reaching out virtually they were confident, you know, a consumer a shopper because they knew you guys and knew your brand, versus getting new client telling during the pandemic. How tough was that? And it's a it's a very good point that we disproportionately, particularly in the US, disproportionately
sold to existing clients. Um and again when when we have clients are on waiting lists for products, and a lot of products are on waiting lists, we get the product, we call the client. It's so quick to straightforward. But the other really encouraging thing as we got a great deal of referrals, with a great deal of people calling and saying, you know, I've got a body or something calling saying I've been referred to you guys, I know you can help. So we're delighted to get that sort
of business too. We also have been very very active. We actually increased their spend on marketing, increased their activity and marketing, We bought into stock. We generally took a very positive approach to the market overall, which has really seen as seen us through. So we've been very present on on digital, on online and other forms of marketing, and so we we have had new clients. We've had a lot of people contacting us for the first time.
But your point is correct. We were selling proportionately more to existing clients, which brand of Watches of Switzerland Group. Brian, we have about forty seconds and then we're gonna take a break and come back and talk some more. The digital though approach. How much of what you did reaching out to clients digitally do you think stays with us on the other side of the pandemic. Is there's now
a normal way of doing business? I mean, for sure, there's a lot that we've learned during this period that we It's going to be a part of how we approached the market going forward. Luxury concierge, online support, appointment making more clients, and just a digital presence our online business. All of that's been accelerated and all that will be a big part of a of a future. Hey want to get it right back to our guests. Brian Duffy's still with us, CEO of Watches of Switzerland Group. I
mentioned they reported earnings earlier today. Company also laying out a five year plan to accelerate strategy in the EU. I want to get into the details of that, and the a d R is really on a tear here in the United States up more than so far. Brian still with us on the phone from London. So Brian tell us about this five year plan, Uh, the strategizing that went into it, and what will be the approach. You know why we've done the five year plan. Cattle
is invested. Community were just more and more interested in understanding the potential of our growth. You know, we came to the US and two thousand eighteen more market leader in the UK, I think you know, uh, and there our first international step was was into the US two thousand seventeen, two thou eighteen. It has really been a great success. So proud of what we've done. Um, I got a great consumer reaction, great support from our brands, and we're ahead of any sort of expectation we had
of ourselves. In the US, our investments have worked on new stores in Manhattan. I'm sure you've seen in huts and yards and down so like successes, how we've integrated the business and mayor so really really delighted about the U s success and so part of all our our five year plans are that we will continue to grow in the UK. We have some exciting new developments coming with great new marketing that we're doing. We're going to step up and customer service, so a lot of good
things that will grow our business in the UK. You think we're going to get this proportionate growth in the US, we've actually said paranum and we're confident all of it. It's got to be done, it's got to be executed. But at the interls there to do mixture of new projects and investing in our stone network, he calm and and acquisition, and we put all that together and we think we could do that kind of grow and go ahead.
Please no, no, no, please finish. So the geography is the EU UM and we see similar characteristics in the EU as as as as in the US, and that is um. The market is pretty fragmented, that a lot of small retailers and and today it's really important to have scale, to have resources, to be active in digital and so on, and and that's helping us grow in the US. And we see the same conditions existing in Europe. And therefore were we have we've analyzed the European market.
We spotted where we think our opportunities and so we have built into our plan for the first time, our plan to enter the EU market. And we think by the end of five years, maybe around five to eight percent of oursels could could be in the EU. So part of your strategy and you asked as you did pick up some retailers, right, and is that the same kind of strategy that you will deploy when it comes to the EU. Yes, I mean definitely, it's the best
way to enter a market. Here. You get expertise, you get clientless, you get great people, get salespeople as we did the mayors and win. You know, we acquired the right subpetial in the wind results in Las Vegas. So yes, it's it's the right way to do it. Um, we don't know everything about these markets. We get things to sope. If you're buying a business, you're buying that expertise and not understanding of the market. Plushure brin One thing that
I wonder too, though. There's a lot of money out there chasing a lot of targets, you know, whether it's back money, whether it's private equity money. You know, we talked about a pre pandemic. It's a story and narrative that's considered. I mean that's continued certainly during the pandemic.
Are you concerned about having to pay up or are you find actually maybe some too stressed assets that will make the m and a UH movement maybe not too expensive, but we're not We wouldn't be looking at distress, to be honest, but we're looking at good businesses, good coin concerns. And like I said, there's a lot of smaller businesses in the US that tend to be family owned and there's a lot of situations whether might not be succession and so in great businesses, great people, but they may
not have the succession. We look by the way to retain management and teams wherever we go and make sure that what we're doing is additive. We're bringing systems, we're bringing marketing, we're bringing digital, we're bringing scale um so. But we'll not look at by no means looking at distress situations we have. We will look to be fair and consider it and the prices that that we're doing. And you know, so far, so good, and we've you know, quite quite a few discussions to get on the US
market that at advanced stages. He bro you know, getting into you into this segment. I talked about a lot of luxury watchmakers cutting back on their production UH last year because of oversupply and obviously during the pandemic. I think initially, you know, everything, of course just shut down. I saw in a statement where you said the luxury watch market remains predominantly supply driven, with demand exceeding product
availability for key brands and models. UM, So supplied demand has worked its way out or is there in some cases still an oversupply. Honestly, I don't think they really ever boys and over supply. UM. I think for many, many years, if you look at the market as a whole, demands exceeded supply is different by brand, but over all demands exceeded supply. UM. And you know our biggest partnership for examples both rule X and what we have with all exes and increasing NOBE of their products are now
going on waiting list. Um. And you know almost you know, the majority Range I was on waiting list, and Sam again with particularly on Marpo, with some of the other brands were waiting lists. You know, with Omega the Snoopy watch, it celebrated the whole association with the National for example, is in waiting list. Brightlings Endurance pro Tudor, which is part of the role X Group brand, but every new
product they brings in waiting list. So honestly, demand significantly exceeds supply when you look at the market overall and that that differential is growing at the moment while in reducing just about twenty seconds ltter seconds. What's been a top seller lately? Um, top seller that's been obviously everything role X, the Tonas and Maronald's GMT. Huge demand overall, protects Nautilus, Odomar, Royal Oak. But you know all the
other good successes around. Brightling has been a really good success with great you put upt Santos from Cape has been a big success. So too many to mention it really, it's going to say quite quite a variety there. Um, Brian, thank you so much, really appreciate checking in with you again. Take care of yourself. Brian Duffy, he's CEO of Watches, a Switzerland group, joining us on the phone from London.