Watches of Switzerland Group PLC (WOSG) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to the presentation of our fiscal year '22 results. Thank you for joining us. My name is Brian Duffy. I'm the CEO of the Watches of Switzerland Group. I'll be presenting our overall group performance and then our CFO, Bill Floydd, will present the financial report and the outlook. We will then, as usual, be happy to answer your questions. Fiscal year '22 was a very strong year for our group, achieving sales growth overall of 40%, U.S. plus 48% and the U.K. plus 36%. Luxury watches grew by 36%. Luxury jewelry was very strong at plus 86%. Profits benefiting from the leverage and more favorable margin mix grew by 68% at the adjusted EBIT level, with EPS year-on-year growth of 76%. Return on capital employed improved significantly by 770 basis points to 27.4%. We opened our first showroom in the EU in Stockholm. We're ahead of schedule with our LRP and feel confident in our LRP goals. Momentum remains strong. Waiting list continues to grow, and our business model has proven to be both resilient and adaptable. Looking over the last 6 years, including clearly the COVID disrupted years, our sales have grown at an average of 17% and EBIT at a CAGR of 31%. If you look at selected markets in the 2000 to 2010 decade, global growth in Swiss watches was driven mainly by Asian consumers through Hong Kong and EU markets such as France. The U.K., during this decade, enjoyed a decent level of annual growth of 2.7%. The U.S. suffered an average decline during these years of 1.9%. In the most recent 11-year period, which includes the transformation period of our group, the U.K. market was the clear leading market with 8.4% annual growth. The U.S. returned to growth, particularly in the most recent years. So in the last 11 years, the U.K. and U.S. have been particularly strong markets. On this chart, we show the per capita sales of selected markets by simply calculating the estimated retail value of Swiss exports to these markets divided by total population. As shown, the U.K. is the #1 market outperforming all others and the U.S., where we've been growing our presence now for 5 years and the Nordics where we are launching are the 2 lowest per capita sales market. This chart shows the current year Swiss exports compared to last year and 2 years ago. Whereas the total market has increased by 13% versus last year, the U.S. at plus 36% and the U.K. at plus 31% are leading growth markets, whereas China at minus 30% and Hong Kong at minus 8%, both declined due to COVID restrictions. We are very much more excited by the luxury jewelry market today. With this chart showing how strong market growth has been on the left over the last 6 years. And on the right, the comparison again per capita of the U.S., U.K., EU and global markets. The U.S. is by far the leading jewelry market. And in Europe, the U.K. is a leading market at more than 2x the EU per capita. We are developing plans to increase our presence and share in all of these markets. The first pie chart here shows how our high growth in the U.S. has increased the U.S. share of our group sales from 24% in fiscal year '19 to 35% in fiscal year '22. And the second pie chart show how our sales are now 98% to domestic clients in FY '22 versus FY '19 when 21% of our sales were through tourists and 12% through airports. Demand for luxury Swiss watches continues to further exceed watch production. Consequently, we are, in some cases, dealing with no in-store stock for sale for key brands. And with many other brands, we are waiting lists for key product families. The product shortage is across the majority of the Swiss luxury watch category, and we estimate that 75% of the products we sell on a value basis are on wait-list today and constrained by availability. The industry is responding to market demand and heightened interest in the Swiss watches by investing in product development, marketing and infrastructure. The Watches and Wonders fare that took place in Geneva in spring this year was, we believe, a great success with Rolex, Patek, Richemont brands and LVMH brands and many independents, all presenting. The annual volume of new products and product variations have increased significantly since 2019. New products are very important for our markets and stimulate interest in multiproduct purchasing. Icons are increasingly popular, such as we see here, the Omega Speedmaster Moonwatch; the TAG Monaco and the Gulf colors famously worn by Steve McQueen; the Cartier Santos, one of the first ever wrist watches with a stunning blue bezel; Patek Calatrava with a texture charcoal gray dial; and the showstopper for Rolex, a GMT left-handed piece with green and black bezel; the Panerai Luminor and the Breitling Navitimer and Superocean ; the IWC pilot; and celebrating the 50th anniversary of the first steel luxury watch, the Audemars Royal Oak. Iconic watches are highly desirable and directly influence product development across the entire industry. Color has been a great vehicle for introducing newness and excitement to product ranges. Increased use of rubber, canvas and other materials for straps increases color options. The introduction of the joyful colors from Rolex in September 2020 was a huge success. The rich colors of the new Omega 57 range are stunning. Bright blue and vivid orange are hot colors today. Luxury watches last forever. The pre-owned market is expanding, as is our pre-owned business in the U.K. and with analog shift in the U.S. We continue to expand our National Watch Service Centers in Manchester and in Fort Lauderdale. There is also more development from the watch brands of an environmentally positive products and packaging, such as the eSteel Luminor from Panerai using recycled steel, solar-powered products from Cartier and TAG Heuer and reduced packaging using recycled materials from Breitling. Smaller independent brands provide a disproportionate amount of product innovation, such as a double chronograph from MB&F and Miss Audrey Sweet Art from Bovet, for which the dial is made from sugar crystals or the [ kill ] dial designed from DOXA on the watches of Switzerland exclusive. Sales from the smaller independent brands are growing exponentially with many products sold well in advance of delivery. Our Jewelry business grew 86% in fiscal year '22 and our presence in the jewelry market has stepped up significantly with our acquisition of Betteridge. We're investing in in-house brands of Mayors, Mappin & Webb and Goldsmiths and in our partnership with global leading brands. Our technology and in-house resources continue to develop. The luxury concierge team based here in Oxford Street #31 colleagues with further expansion plan this year. They do a fantastic job achieving an amazing conversion on sales calls of 15.6%, 50x typical online conversion. We are building a U.S. virtual boutique team in Fort Lauderdale. By Appointment is now a permanent way of business and a very high positive client experience and we continue to expand our CRM capabilities, particularly in support of our Xenia Client Experience Programme. Our e-com business remained strong in fiscal year '22, following a more than doubling of the business in fiscal year '21. We continue to invest and grow our online business in the U.S., which has significant future potential. Our U.K. digital marketing expands further with social media reached of almost 60 million monthly and total campaign impressions of a staggering of 5.7 billion. Digital reach is also increasing substantially in the U.S. Our priority with our U.S. marketing campaigns is PR impressions, which hit 10 billion in the year. The launch of our Xenia Client Experience Programme, in partnership with Ritz-Carlton has been a great success, and client and colleague feedback is universally positive. We have the best teams in the business. These images are from our upcoming annual report. Retail is a people business, and our team engagement and motivation is key to success. We were delighted, therefore, with the response to our recently completed engagement survey. Results showing an 86% engagement score, which is exceptionally high for retail and 90% plus scores on positivity of company success and pride in working for our group. We were pleased to award 50 shares to all of our colleagues and implement a Share Save scheme in January this year. We have implemented our new purpose and values in recent months. And we continue to step up in all aspects of ESG. The company has made GBP 4.5 million in donations to our foundation this year, GBP 1.5 million of which was accrued last year. We are actively involved with all of our chosen charity partners, and we have a great group of active committed trustees. We continue to invest in and expand our showroom network. In the U.S., we now have 40 showrooms, 23 multi-brand, 17 mono-brand boutiques. In the U.K., we are present in all markets nationwide with 131 showrooms. This is our new showroom in Cincinnati, Ohio, opened in March this year, our completely refurbished Rolex boutique in Wynn Las Vegas, which reopened in December '21, is truly stunning. In the Aventura Mall in Miami, we have more than 100 feet of fascia presenting Rolex, Mayors and BVLGARI boutique. Here, we see Mayors and Rolex. And here, we see the BVLGARI mono-brand, which has been a great success. We opened our first TUDOR boutique in Orlando, Florida in January '22, which is doing great. And our most recent Mayors opening is the relocated showroom in Boca Raton, including our first Hublot presentation in Mayors. The next relocation will be Dadeland and the Mayors refurbishment program is planned to be completed by calendar year '24. We are progressing expansion plans with our Betteridge showrooms, and we've taken additional space in Greenwich of 2,500 square feet ground floor. We have taken additional space in Aspen, and we continue to look for further expansion in Vail. The American Dream project is happening and we hope to have this showroom opened before the holiday season this year. Goldsmiths Luxury design has been implemented at pace with 7 showrooms completed in fiscal year '22, a further 7 planned for this year. Mappin & Webb Chester was relocated and expanded in April 2022. The opening of the Battersea project is now planned for October. We will open a Watches of Switzerland showroom with Rolex and Cartier and the first Breitling boutique in the country with a Breitling café, and a further 3 mono-brands in this development. We've opened our first EU showroom, a Breitling boutique in Stockholm. And the other projects previously announced in Stockholm, Copenhagen and Dublin are all in progress. Our pre-owned and vintage business in the U.S. has been totally upgraded and rebranded with a new showroom on 57th Street, New York, a new website and increased distribution within our network. We have increased procurement as we can see here. And we have impactful ad campaigns. Pre-owned in both U.S. and U.K. will become an important part of our future business. I will now hand over to our CFO, Bill Floydd.

Thanks, Brian, and good morning, everyone. I'll start by taking you through some of the highlights on the income statement. This is presented on a pre-IFRS 16 basis and excludes exceptional items. Full details of those and the reconciliations to the statutory numbers are included in the RNS. Revenue grew by 40% on a constant currency and 52-week basis, with strong performance in both the U.S. and the U.K. and across all products and services. At a brand level, the average selling price increase for every watch brand, although due to mix at the group level, the ASP reduced. Jewelry ASPs increased in both the U.K. and the U.S. Net margin expanded by 130 basis points due to favorable product mix and higher revenue growth coming from jewelry. Adjusted EBIT was GBP 130 million, growth of 68% and margin expanding by 190 basis points to 10.5%, as we achieved strong leverage across the income statement. The effective tax rate remained at 20.8%, exceeding the standard U.K. rate due to the mix of profitability coming from the U.S. In FY '23, I expect the effective tax rate to be around 21.5% to 22%, as profitability becomes more weighted to the U.S. Adjusted EPS increased to 41.8p, growth of 76%. Here are some other highlights of a standout year of financial performance. As noted on the previous slide, adjusted EBIT grew by 68% to GBP 130 million. Return on capital employed increased from 19.7% to 27.4%. I've been very impressed with the discipline that the team displayed in their approach to CapEx and ensuring that capital is prioritized to the right projects. We conduct lessons, learned activities to improve our playbook on a regular basis, and all projects undergo a thorough post-investment appraisal. The ability of the group to drive strong free cash flow provides the opportunity to continue to invest in showroom refurbishment, new showrooms and M&A when the opportunity arises. In the year, net debt reduced from GBP 44 million to GBP 14 million after investing GBP 41 million in capital projects and GBP 44 million in M&A. Moving to the balance sheet, which is presented here on an IFRS 16 basis. The key items of note are the increase in goodwill and intangibles driven by the acquisition of 5 U.S. stores, the increase in PPE from our ongoing showroom investment program and the increase in right-of-use assets and lease liabilities due to the expansion of the showroom network. Inventory increased by GBP 81 million. On a constant currency basis, the increase is 32% and a business growing by 40% on the top line. We would like to expand our inventory holdings further to be able to offer our clients a broader range of products in showroom, and we continue to work with the brands to increase availability. In the year, there was an improvement in the stock turn to 2.6x compared to 2.1x in FY '21. FY '22 was another year of strong cash generation. The key points to note here are the working capital outflow on inventory as highlighted on the balance sheet. The expansionary CapEx investment of GBP 41 million and the M&A spend of GBP 44 million for the 5 additional stores in the U.S. Here, we've set out a reminder of the group's facilities. The group enters the year with close to 0 net debt and existing cash facilities available for investments and the working capital cycle of GBP 190 million. With the current inflationary pressures in the economy, I've set out for you here the makeup of our cost base, so you can get a good idea of how well we are insulated from but not entirely immune to inflation. Approximately 3/4 of the cost base is product bought for resale. We operate on fixed margins with our suppliers. So if the wholesale price to us increases, then the recommended retail price increases by the same percentage. Most of the brands announced their price increases in Q1 of the calendar year. And price increases announced so far this year averaged at around 4.5%. People costs represent about 11% of the cost base. And clearly, there is some pressure here. About 1/4 of the payroll is variable by way of bonuses and commissions. We've recently enhanced the overall benefits package for our teams with an additional day of holiday, enhanced medical benefits, launched a Share Save scheme and gifted 50 shares to all colleagues in December. Rents and other property costs are largely fixed. And whilst utility costs have increased, these are an immaterial overall part of the cost base. The largest component of marketing cost is performance marketing, where we apply strict payback criteria to our spend. Other costs include IT, legal, advisory fees and other costs you would expect in a business like this. Today, we reiterate the guidance we gave a few weeks ago when we released our Q4 trading update. We expect revenue to grow at 17% to 21% based on the visibility for key brands availability through the 2022 calendar year, a recovery of footfall and a return of airport traffic and demand driven by domestic clients with limited tourism. This reflects confirmed showroom openings, excludes M&A and assumes no further lockdowns. We are guiding to EBITDA margin expansion of 0 to 50 basis points. Leverage should be margin enhancing, offset by investments in the business and some modest inflationary pressures. This will be weighted to the second half of the year as we benefited last year from 0 rates in the U.K. to the tune of around GBP 5 million that annualizes out during the first half. We expect the tax rate to increase slightly because of the increasing geographic mix towards the U.S. The CapEx range of GBP 70 million to GBP 80 million includes investment in a new corporate HQ in Leicester, having significantly outgrowing the existing facility with key highlights of the showroom investment program being the new Battersea development, American Dream, 7 more Goldsmiths Luxury refurbishments, additional mono-brands in the U.K. and U.S. and our expansion into Europe. We've made a strong start to the long-range plan with a 40% growth rate in FY '22, being well ahead of the plan. Whilst we're conscious of the broader economic slowdown, we remain confident that our category is strongly differentiated through the innovation being brought by our brand partners, the scale of our existing business, our expansion into Europe and multichannel approach, showroom development plan in both the U.K. and the U.S. and the M&A pipeline, all giving us confidence in being able to deliver the plan. We expect to review the plan in full in the spring of 2023. With that, I'll hand you back to Brian for his closing remarks.

Thanks, Bill, and well done on your first year-end presentation for the Watches of Switzerland Group. Let me just summarize the key points from this year's performance. We've delivered record sales, profitability and return on capital employed in fiscal year '22. Demand and market momentum remained strong. The Watches of Switzerland Group model has been enhanced, and we are gaining market share. We've delivered positive progress in all aspects of ESG, and we are ahead of our schedule on our LRP and confident in our goals. We will now be happy to take your questions.

[Operator Instructions] Our first question comes from Karina Nugent of Goldman Sachs.

Thank you very much for a very clear presentation. I have a couple of questions on my side. So thank you very much for the update on current trading and particularly the commentary on the wait-list. Clearly, there's been a lot of interest from investors and the market like just in terms of the weakness in secondary market, particularly some of the supply-constrained brands like Rolex. Is there anything that you would call out in terms of the wait-list structure by price point or by product? Or are you seeing that similar dynamic of extension to wait-list on a broad-base basis? And also, when we look into the less supply-constrained brands, is there any change in customer behavior that we should be aware of that could be a leading indicator? And then secondly, I just wanted to touch base on the European expansion. And congratulations on opening your new store in Stockholm. Is there any early reads there in terms of the reception that you've had? And when we look forward in terms of the priorities for expansion, is it more bringing other brands to those cities where you will always have a presence like Stockholm, Copenhagen and Dublin? Or are you looking to expand the presence of the brands that you've got on those used to other regions in Europe? Just trying to think about that.

Thanks, Karina. I'm going to be fairly boring in the answer to these questions because our experience is that nothing is really changing on the nature of wait-list. We're adding more people and we're able to take off with supply overall. We're actually adding more products effectively to the wait-list. And it really is a situation now that pretty much goes across just about every brand that we supply. We have some degree of a wait-list on it. So there are really no change. And to the kind of broader consumer base, again, we're not experiencing any change. Overall, the dynamics that prevailed throughout last year, a real broadening update of the appeal of watches -- Swiss watches and inclination to buy into higher price points within the selected brands. All of those dynamics pretty much continued. We haven't read or experienced any real change at all. Stockholm, it's too early to comment. We've just got to open them and up it say that our team did an amazing job. It's a beautiful-looking store. They put kind of general management in place for that entire region. And we have a great team within the store. So I don't know if you know the area, but it's a beautiful street with great architecture, and we're confident about it. But it's summertime in Stockholm. So we really don't have that much of a summer as we know, so they do enjoy it when it happens. But -- so July and August are always quiet months, which we knew was going to be the case. But we're happy with the opening, delighted with the team, delighted with the store and feel confident about the potential. We've always said, up the Nordics, we are -- has been our entry into Europe. I would look to do more there. Obviously, we've got the announced openings that are coming additionally in Stockholm and in Copenhagen. We would like to plan to do more in that region. And at the same time, we are looking at other markets. We've given -- and we presented that again today. our view that we think we could bring something positive to every market in Europe. Our approach of big stores and scale, supportive technology and marketing and great client service, we think, is opportunity for. But we've got to then turn that into a specific store brand and possible acquisition opportunity, all of which takes time. But of course, we're working on it all.

Antoine Bregeaut of Exane BNP Paribas.

This is Antoine Bregeaut from BNP Paribas. I've got 2 questions. First, I wanted to know in terms of price increases, if you would except any further price increases for the remainder of 2022? And my other question is on the jewelry performance. If you can please expand your expectations for next year? I mean, if you still expect a strength and outperformance, probably of the jewelry versus watches into next year?

It would be unusual for the brands to have more than 1 increase in a calendar year. I mean there has been reactions before when Brexit happened and the pound value, there was much more pricing activity happened around that. Might we be in similar circumstances with the appreciation of the franc, particularly against the pound and euro. I think that's a valid question, but there's nothing that we know to suggest that there is going to be any follow-up pricing within this calendar year. But yes, we are aware of obviously, the exchange rate differentials that I'm sure brands are looking at. Just to remind you and everyone on the call, we buy in local currency. So therefore, the loss of value of sterling has effectively cut by the brands. Dollar has remained strong, in the U.S. we buy in dollars. So we'll see. But our increases announced will be worth between 4.5 -- between 4% and 5% overall. And that's all that we've baked into our thinking at this point. As we've been reporting, we're excited about the prospects of jewelry. We're learning a lot, particularly from the U.S. market. Our BVLGARI store has, I think exceeded everybody's expectation in Aventura. Clearly, we'd love to do more of that in other places. And obviously, the discussions are underway. Everything takes time. But yes, we'd like to do more of that. But Betteridge, we're again, learning from them on what they do. They have a great track record and reputation and -- in business and jewelry, and we are learning from them. And at the same time, looking at other opportunities. I think the strength of the market in the U.S. is there for all to see. We have great momentum, by the way, in the U.K.. And we actually have had for some years, we've got great teams working on it. I think really skilled or buying and merged teams working with the supplier base overall. And we were and have been for some years growing in jewelry but our growth in watch is just somewhat overshadowed up until this year. So yes, we feel positive about the category and the prospects. We're more excited by it and more focused perhaps on it than we might have been in prior years. And so if there be more specifics, obviously, we'll let you know.

[Operator Instructions] our next question comes from Kate Calvert from Investec.

Three from me. The first question is on the U.K. You are opening mono-brands in the U.K. at pace. What do you see as the potential for mono-brands in the U.K. going forward? My second question is on Rolex. Is there any news from Rolex on future capacity increase? And the final question is, could you elaborate more in terms of how you're expanding into the pre-owned market in the U.K. in particular?

Okay. We are opening mono-brands. Again, we don't announce anything specific until all deals are done. But I think it's been a very successful move by us into the kind of mono-brand space. So it's a significant elevation of brand presentation and it's once again resulting in positive impacts from -- on the consumer conversion overall. So as we have announced that we have -- it will be a big day in October when we open in Battersea because we'll open 4 more brands alongside our multi-brand. Other projects that we're working on and we've included the number of mono-brands and -- of...

Multi- and mono-brands in the U.K. and U.S. opened.

Two opened, yes, 2 opened. And they're currently [indiscernible]. So in some case, there is more potential in U.K. and U.S. and mono-brands. And obviously, we continue to work on identifying opportunities in discussing with the brands. There's no news on Rolex capacity. Again, nothing confirmed from Rolex at all in terms of production. I think they're doing everything they can to respond to demand. That's there within the constraints that they have, obviously, of maintaining the highest quality of everything that we do. So -- but no news on capacity overall. U.K., we get 38 mono-brands -- It's in the presentation, 38 mono-brands at the end of the year. Pre-owned, it doubled our business in the U.K., but that takes it from 1% to 2%. So it's still relatively small in terms of our total business. And it's all about sourcing the right quality of products we have invested in and expanding our service center in Manchester, who are handling a lot of the refurbishments and so on. So we have the capability that's clearly a strong response from a consumer viewpoint and selling pre-owned for sure. So we have plans to increase sourcing and expand in the area. The bigger business, of course, that we have in the bigger market for sure for pre-owned is the U.S. and we've invested a lot behind analog shift, and we're enjoying some really great market response on that.

Right. Can I just come back to you on the U.K. mono-brands. I mean, could you see potential, for example, to double the number of mono-brands in the U.K. from here?

Well, that depends what time period you're looking at. We opened our first TUDOR mono-brand. That brand is very, very strong. I think it translates very well to mono-brand environment in terms of marketing and software. And that's great. So that's traditional. We mentioned earlier that we opened the first mono-brand of BVLGARI in the U.S. We have Grand Seiko in the U.S. So there are other brand possibilities, and there are clearly other market possibilities for the brand so far developing the category with. We'll see. We'll announce. We just don't like to get into speculative numbers at all on what might happen. We're following, I think, a strict code of when we have deals that are done and fixed, we'll tell you, Kate.

Richard Taylor of Barclays.

Also a question on the pre-owned business. I see you've invested about GBP 20 million into pre-owned inventory. I don't know whether that's the total, but that's sort of 6% of the stock. So just wondering if you should follow over time that, that sort of amount of your earnings could come from the revenue you generate. So just any update in terms of the earnings power from that polar business? And then secondly, just speaking for an update in terms of the pipeline for acquisitions that you're looking at in the U.S. and Europe, actually used in another single site in the U.S., but just sort of thoughts on vendor attitudes there sort of what you might expect to achieve over the next 12 months from an M&A perspective?

Richard, we have invested in pre-owned stock again, as I mentioned in the presentation. And yes, it's turning well. And as I said in the presentation, pre-owned is going to make a much bigger contribution to our business going forward. I think we're quite optimistic about the incremental business that we will do this year from that stock that you're referring to. And the U.S. market, for sure, is much more established market overall, in which we've got a great vehicle to participate with analog shift, complemented by the credibility and support, obviously, from our group. So yes, we'd look to turn that stock. And so far, so good, and we really put the investment in terms of the website, advertising the showroom, I think you've seen actually the showroom in New York. And of course, you've got to then invest in the stock for the consumer to this point. Acquisition, honestly, we get nothing to say for now. We obviously work on a pipeline of acquisition, and we always have done for the last few years. And as we've explained, often it does take time. You could do things quicker by overpaying, but we're obviously not going to do that with shareholder money. I don't think there is a change overall in attitude, particularly and a part of those targets that we're talking about. And again, as soon as we have news like we've just done with the store that you're referring to, as soon as it's done, we'll announce similarly to obviously what we did last year with the 5 store acquisitions that we made.

It appears we have no further questions in the queue at this time. And we have another question from Daria Nasledysheva from Bank of America.

This is Daria from Bank of America. I actually have a couple of very quick questions. First one, could you please comment on your market share in the U.K. and the U.S.? Would you have any update on this metric? And my second one would actually be, do you believe there is any potential margin compression coming from non-supply-constrained brands to kind of similar to a move that Rolex did in the U.S., taking into account very fast growth in the brand sales price increases, et cetera?

We don't quote market share, Daria. We really just don't have reliable enough data in the U.K. We have GRP, which is a good source to start with. But we then have to do a lot of work in terms of correcting and that doesn't include, for example, the corporate boutiques of brands and so on. So it's not something that we, therefore, are in a position to regularly update and be specific on. We have our leading market share in the U.K. I mean, I think that's a very comfortable statement to make overall about the specific market share. And we are gaining share overall. But that, again, from our specific activity that we own in regions and shopping centers, where we know we're gaining more of a share or more of a presentation we might have had before. U.S., there's absolutely no data around in the U.S. I think you're looking at high single-digit-type market share there. But it really is a rough estimate, nothing better around. Once again, we believe that we're gaining share that we're tracking ahead of the market overall, and that would translate to gaining share but it's a relatively modest share that we're starting from. Margin compression. There's nothing new that we did anticipate in the U.S. where margins historically were better because productivity was lower. We did anticipate in our long-range plan that likelihood as if margins would come in line with European margins and with the move that Rolex made, that's, I think, largely done. So yes, nothing followed on margin.

And as there are no further questions in the queue at this time. I would like to invite the Watches of Switzerland team to provide the closing remarks.

Thank you. Thanks, everybody, for joining. And just a summary is that we are very pleased with the results. We're pleased with the start to the year. We feel good about [our LRP ]. We feel good about a lot of things that our business is doing, including our foundation that we've referred to and the engagement we have for our employees and everybody on that and the work that we're really helping support alternatives put in place as necessary, but it's really positive to see overall. So a big thanks to our team that -- an amazing team I have here with me now and our team out there in the stores and Leicester and Fort Lauderdale around. They do a fantastic job, and they have delivered these great results. So very much thank you and appreciation to them. And thanks for joining the call.