Good morning and welcome to the presentation of the Watches of Switzerland Group first half fiscal year 2022 results. We communicated sales performance and estimated profits for the half on the 9th of November, and now we're presenting the final results and some further details. I will give the business update, then our CFO, Anders Romberg, will present the financial review and the latest outlook for the full year. We will then open up to your questions. Group sales were GBP 586 million +45% and +41% versus last year and two years ago, respectively. Business in the U.S. continues to be very strong at +50% versus last year and +67% versus two years ago. In the U.K., sales were also very strong at +42% versus last year, +32% versus two years ago.
Group E-com at +29% was a positive pleasant surprise given that this year stores were open and last year was impacted by lockdown store closures and much reduced traffic. Profits benefited from favorable margin mix and cost leverage. Consequently, adjusted EBITDA at GBP 82.8 million was 59% ahead of last year. Adjusted EBIT bettered last year by 63%. We made good progress towards our long-range plan objectives, both from the strong sales performance and from the announcement of 5 new store acquisitions in the U.S. These pie charts compare this year, last year, and two years prior and show the changing mix of our business.
The top pie chart shows that in fiscal year 2020, the client split of sales was 40.5% U.K. domestic, 25.9% U.S. domestic, and 33.6% international, which was all in fact in the U.K. The international sales mix was down to 7.4% in fiscal year 2021, and this year less than 2% as we have successfully pivoted our business to domestic clients. U.K. domestic client sales moved from 40.5%- 63.6%- 69.7% of group sales through these periods. In the second pie chart, we see the changing mix of brand sales.
Supply-constrained brands, by that we mean Rolex, Patek, and Audemars, were 60.5% of sales in FY 2020, increasing to 68.9% in FY 2021, as last year we continued to transact with waiting list clients during the store disruptions. With stores fully open, brand split returned to more normal levels this year. However, the other luxury watch segment where we have less limitation on supply enjoyed very strong sales growth in both the U.K. and U.S. and increased to 28.2% of group sales. We continued with our capital program, opening three stores in the new Edinburgh St. James development and three mono-brand stores in Plymouth. We introduced our new Goldsmiths Luxury concept in Canterbury and Reading in the half year, and we've now completed the Leicester store. They look really fantastic.
We completed five more refurbishments in the first half, including two previously Fraser Hart stores. We now have a network of 98 multi-brand stores and 32 mono-brand stores in the U.K. We see here our three mono-brand stores recently opened in Plymouth. In the U.S., our delayed flagship store in Aventura Mall, Miami, has opened the Rolex room and our first BVLGARI mono-brand. The balance of the store opens next week. Our Monos and E-com businesses in the U.S. are both performing very well. We are delighted to have announced our acquisition of five stores in the U.S. Our Betteridge acquisition closed formally on the 1st of December. In total, we now have 36 stores in the U.S., 22 multi-brand and 14 mono-brand. The combined LTM revenue of the stores acquired is $100 million.
The purchase of the five stores takes our U.S. presence now to 12 states. In other developments, our planned opening of a multi-brand store in Cincinnati will now be in January. We have completed a thorough rebrand of the vintage watch retailer Analog Shift that we acquired last year, and we have stepped up on the product acquisition. We have also launched our new website. I visited the Wynn Resort recently and our complete rebuild of the store, which will open before the end of this month, is fantastic. Our new store in Minneapolis, our new store in Dallas, and in the Rocky Mountains in Aspen and Vail, and in the charming town of Greenwich, Connecticut. I also visited recently the American Dream project in New Jersey, which will open next summer.
Also opening next summer in the U.K. will be a Watches of Switzerland multi-brand store in Battersea with Rolex and Cartier. We will also open three mono-brand stores in what we think will be a great shopping destination for Londoners and tourists. Our digital resources and skills have become even more important to our model as we engage with clients in various ways. Today in the U.K., more than 40% of sales are through pre-appointments. We introduced new products to clients virtually often with our brand partners. Our luxury concierge team continues to grow and is very successful, both with online sales and store support. E-com is doing great in both the U.K. and U.S., and of course, CRM and clienteling today is vital. We continue to invest in digital marketing and social media.
Campaign impressions in the half year in the U.K. totaled 2.9 billion. In the U.S., our priority of marketing is PR, and we achieved 2.4 billion PR impressions in the half. Our greatest strength is and always will be our fantastic teams who do an amazing job. We really do have the best teams in the business. We are making progress on all matters at ESG. We've appointed a board committee chaired by our non-executive director, Rosa Monckton, MBE. We have recruited a full-time executive to head our ESG programs. We've joined the FTSE4Good and Business in the Community and joined the BRC pledge to net zero by 2040. The Watches of Switzerland Foundation has been formally registered as a charity with directors and ambassadors recruited.
Following our first board meeting, we have agreed pledges of more than GBP 1 million to food banks in London, Manchester, Newcastle, Liverpool, Glasgow, Birmingham, Leicester, Bristol, and Cardiff. We have also pledged support for the Prince's Trust, with whom we have worked for many years, the Glasgow's Hospice, which we have also supported for some years, and a new partner, Crisis, who work with the homeless in our cities. I will now pass over to our CFO, Anders Romberg.
Thank you, Brian. This presentation is based on a pre-IFRS 16 basis and covers the 26 weeks to the end of October 2021. We have had an excellent first half, achieving record sales and profitability. Net sales in constant currency were up by 45% on last year and 41% on double LY. Our U.S. business in constant currency was up by 50% on last year and 67% on double LY. In the U.K., sales were up by 42% on last year and up by 32% on two years ago, when our tourism and airport business accounted for approximately one-third of our sales. The pivot to the domestic market over the last two years has been fantastic, and sales to this clientele has more than doubled.
The demand environment for luxury watches and jewelry remains strong, with growth in the period led by significant increase in volumes of non-supply constrained brands. Luxury watches continued to perform well, with net sales being up 41%. Luxury jewelry, supported by our stores being open and a boost in weddings, was up by 55%. Our net margin increased by 130 basis points, primarily reflecting favorable product mix. We leveraged our fixed cost, with store costs being down 30 basis points as a percent of sales, despite having received government support in last year. Our adjusted EBITDA was GBP 82.8 million, up 58.8% on last year, and our adjusted EBITDA margin expanded by 150 basis points to 14.1%.
Adjusted EBIT came in at GBP 67.5 million or +63% on last year, and our adjusted EPS grew by 73%. Our balance sheet is stronger than ever. During the half year, we progressed our capital program, investing GBP 19.1 million of expansionary capital. We opened eight new stores, expanded three, and refurbished five stores. In addition, we acquired two stores. On December first, we closed on the Betteridge acquisition with an additional three stores added. Inventory levels increased by GBP 18.9 million versus last year and closed out at GBP 240.8 million. This reflects the buildup of stock levels in Rolex during the second quarter to deliver optimal display capacity, along with depurchasing of non-supply constrained brands ahead of Christmas trading.
We closed the half year with net cash of GBP 30 million, and our headroom at the end of the half was GBP 235.8 million, so well-poised for further investments and acquisitions. Our free cash flow was GBP 102.3 million, representing conversion of 123.6%. Last year's working capital was favorably impacted by the timing of inventory payments due to the store closures during the first U.K. lockdown. We continued our investment program and spent GBP 19.9 million of expansionary capital. Last year's spend of GBP 8.6 million was impacted by COVID-19 related delays to certain store projects. All of our KPIs improved during the half year. Our four-wall EBITDA expanded to 20.5% versus 18.9% last year.
Improved product mix being the main driver as well as further leverage on store cost. Adjusted EBITDA, as mentioned before, came in at GBP 82.8 million or +58.8% on last year. Adjusted EBIT came in at GBP 67.5 million or +62.7% on last year. Our ROCE, calculated on an LTM basis, improved to 23.1%, up from 17.2% last year, with adjusted EBIT on an LTM basis being up 33.5% compared to average capital employed increasing by 13.9%. Now to our guidance for FY 2022, which we upgraded at the time of our Q2 trading update in November. Our guidance assumes no disruption to supply and no extended national lockdowns in our markets or, for that matter, in Switzerland.
Net sales is planned to grow between 27%-33%, excluding any impact of potential future acquisitions. Sales is expected to come in between GBP 1.15 billion and GBP 1.2 billion. Adjusted EBITDA and EBITDA margin is expected to improve by 1%-1.5% on last year. Our depreciation is planned to come in between GBP 30 million and GBP 32 million. Our underlying tax rate is projected at between 21% and 22.5%, as we assumed U.S. federal tax rates to increase from January 2022. CapEx is projected to be between GBP 45 million and GBP 50 million for the year, and our net debt pre any further acquisitions is expected to come in between GBP 10 million and GBP 20 million. Thank you. I will now hand back to Brian for some closing remarks.
Thank you, Anders, and thank you for what was your last presentation and for all the years that we've worked together and what we've achieved. Overall, in summary, we are delighted to be reporting record-breaking first half sales and profits. Our quarter three, five weeks into it, supports our full year guidance for FY 2022. We have given our commitment to achieve net zero by 2040. The Watches of Switzerland Foundation was formally launched, and overall we feel that we are progressing on our long range plan targets. With that, I'll happily pass over to your questions.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We will now take our first question from Anne-Laure Bismuth from HSBC. Please go ahead.
Yes, sir. Good morning. I have three questions, please. The first one is regarding your strategy to enter continental Europe. Where do you stand regarding that strategy? Is this something that can come soon or is this something for later, given that the focus now is also on the U.S.? The second question is about the guidance for profitability for this year. You delivered a strong adjusted EBITDA in H1, implying an adjusted EBITDA margin of 1.5%. What would prevent you to deliver an adjusted EBITDA in absolute terms in H2 broadly similar to H1? The third question is about the BVLGARI standalone store. Can you talk about this opening? Thank you very much.
Hi Anne-Laure, Brian here. Our strategy in continental Europe that we included obviously in our long range plan, we see opportunity there. We see an opportunity for us to, you know, introduce our model, our size, our scale, our focus on technology, marketing and so on that, you know well. We view the markets in Europe in comparison to the U.K. as underdeveloped. As we expressed in LRP, it's as part of our future plans. What we had in the LRP is we said that, by FY 2026, it would be 8% of our total group. We said that we would start to have business in Europe in our FY 2023, not FY 2022. That remains our situation.
Obviously, we were active when we did the LRP. We're active now. The two main vehicles for development and entry into the market in the EU would be through acquisition and mono brands. We're active in both in terms of discussion and opportunity. So what we expressed in the LRP remains our objective. We wouldn't change it at this point. I'll take the third one, the BVLGARI store. Delighted. I think it looks fabulous as you hopefully saw on the presentation on the video. It's a great brand, doing very well, and we're delighted to be partnering with them. The store's off to a great start. Anders, you wanna?
In terms of our guidance, obviously we put our profit margin out there to be 1%-1.5% up on last year. You're right, this first half obviously came in at 1.5%. We're sort of at the upper end of that. This half, as we pointed out, has been sort of impacted by the strong performance that we've seen coming through in our non-supply constrained brands. We had a favorable product mix in this first half on last year. We're sort of at the upper end at the moment.
You know, we obviously expect our business to come back in Rolex, in Audemars and Patek in the second half to some degree, selling what we received. It's product mix predominantly.
Thank you.
As a reminder to ask a telephone question, please signal by pressing star one. We will now take our next question from Richard Taylor from Barclays. Please go ahead.
Yeah. Morning. Can you hear me okay?
Yes.
Great stuff. It was a question about the non-supply constrained brands, especially in the U.S. You know, I think we're well versed on the Rolex stuff and so on, but can you just sort of give us a bit more detail on, you know, why you think the opportunity is so great there, and how what you're doing can sort of take market share and grow the market overall? Just remind us some of the initiatives that you're seeing there and, you know, why you think that they can grow.
Hi, Richard. It's Brian here. I mean, obviously we've taken our store design and philosophy of store design into the U.S., which is that we do big stores. We present our brands correctly. We believe give the appropriate space that's there and have stores that intrigue consumers, first of all, to come in because they're welcoming, they're open and inviting. Intrigue them to, you know, to look at everything that's there overall.
We have an overall view that I think you'd find this from the entire industry that the category overall and the U.S. is underdeveloped, and we think that especially so of some of these other major brands like OMEGA, Breitling, TAG Heuer, and so on. That's what we've experienced that the growth in these brands has been exceptionally strong, and add Cartier to that group as well. They're doing fantastically well. Without any doubt, you know, as you know, the way that we're presenting Rolex today is the stock in store is for demonstration and exhibition purposes, not for sale.
Therefore, particularly, you know, at this time of year when people are looking to purchase for gifting purposes, they need to purchase immediately. Clearly, these other brands are in a better supply situation. We continue to chase supply actually with all these brands, but overall we're in a reasonable supply situation in store and they're enjoying very positive performance, U.S. and the U.K. for similar circumstances.
Just so I understand it, the LRP, when you say 25%-30% top line in the U.S., would you assume the non-supply constrained brands grow faster than the supply constrained? What are your assumptions there?
It's a good question, Richard. Probably today it is based upon, you know, the great performance that we've seen from these brands in the last six months. We might have tweaked that a little differently. At the time when we did the LRP, we weren't assuming any, you know, if you recall, we'd said we would hold overall on our product margin and the underlying assumption therefore is that the mix would not change significantly. The last six months that we're reporting, these brands have been exceptionally strong.
Great. Thank you.
As another reminder to ask a telephone question, please signal by pressing star one. Pause for just a moment to allow everyone an opportunity to signal. We will now take our next question from Louise Singlehurst from Goldman Sachs. Please go ahead.
Hi. Morning, everyone. Thank you very much for the details and great to see the ongoing great progress within the watch category and for yourselves. The quick question I had was, I wonder if you can just talk to us a bit about the strategy about the mono brand stores. It's great to see the BVLGARI opening, but just one, in terms of the plan and the demand from the brands and where your kind of priorities lie within the mono brand strategy, but also from a margin perspective as well. Thank you.
Yeah. The mono brands have proven a very good direction to go. You know what we would emphasize on it is that it's a means by which we effectively can present these brands correctly. I mean, if you look at, we actually showed the visuals, for example, of what we did in Plymouth, where we have three brands adjacent. They are the three strongest brands in that marketplace and you could take the view that it's almost like a multi-brand presentation, albeit that each of the brands got their own front doors and the opportunity to build a really strong environment.
We really favor the brands that we've mainly developed our mono-brand strategy with Breitling, TAG Heuer and OMEGA. They obviously appreciate that elevated format of presentation. Being able to do the brands adjacent like that does give some obvious economics in terms of landlord negotiation, sharing back of house and sharing management and some other activities, so we get the benefit of the concentration overall. Our, you know, expectation in setting up mono-brand was that they would be less productive than a typical multi-brand configuration, and that probably remains true at the top line. We've been, you know, very pleased with the progress that we've made with mono-brands in the U.K.
We've now started a program in the U.S. It's gone well. The BVLGARI one that you referred to, it's the only one store that we have, and it's off to a great start. Could there be more potential there? We'd certainly hope so. I think it's just all part of the elevation of the category overall, just naturally, you know, demands this elevated presentation overall from these brands that they really are globally very, very strong, with strong imagery. The mono-brand allows you to present that much better.
Just in terms of the customer, I mean obviously across luxury and particularly within the hard category, we've seen this very strong consumer environment for volumes and pricing and hearing lots of stories where people are trading up to higher ASPs once they start engaging with the sales personnel. Is there anything that you can tell us as to whether there have been any changes in customer behavior, willingness to spend? Obviously, the category is very strong. We're just trying to make sure we're not missing anything more recently. Thank you.
Yeah. No, you're absolutely right. The category is strong, and we're seeing it across the board in watches and in jewelry. We're having a really, you know, an unprecedented positive experience in jewelry, again, both U.K. and U.S. Within all of the brands there is an ASP increase. So the followers of Omega are buying higher priced Omega overall. Same again with Breitling, Cartier, and so on. Our overall mix, as you know, that these brands have done exceptionally well, just to repeat myself on that, and they've been a higher mix of our total. So our overall ASP is down because of mix, but within the brands the ASP is significantly up.
Our willingness in terms of profile of consumer, we're not really pointing to any significant change in terms of the overall, you know, attitude. Confidence of our consumer base is clearly positive. People are spending more money. We do point to, you know, asset valuations being good, whether it's property or stock market that helps the confidence and the fact that the consumers have less opportunity of spending money on travel or hospitality or whatever. It's been a positive market situation. We're really encouraged by the response of the industry of either us as retailers and others or of the brands of really investing behind the, you know, the positive demand momentum that's there. Very encouraged by the trend and think it's got some way to go.
Brilliant. Thank you.
There appears to be no further questions, so I'd like to turn the conference back to Mr. Brian Duffy, CEO, for any additional or closing remarks.
Okay. Thanks, Tracy. Thanks, everybody, for joining us. Hope you found the video that we presented informative and interesting. We are just very happy with the results for this half year period. Sales growth I think has been very strong. Profit growth even stronger as Anders outlined because of mix and leverage and obviously cash generation has been very strong as well. Cash conversion at 123% and resulting in a kind of record level of returning capital employed of over 23%. Current trading, as we mentioned, we'll not get into detail, but we're encouraged. It's a bit of an odd comparison overall, particularly here in the U.K. this time last year.
For the Christmas season, we were in lockdown in November. We opened in December and then closed again in and around Christmas. It was a very unusual period to compare against. People are shopping early, and as we anticipated, overall and we're very encouraged by what we've achieved so far for the season, therefore so far for the quarter. Confirming our guidance, we think the performance at the moment underpins our guidance. Delighted to have closed the Betteridge deal on December the first. Our team in the U.S. did a great job along with our new colleagues in the Betteridge in getting that done.
Therefore, we feel we're in very good shape with regards to progressing towards our long range plan objectives that we set out. Our teams just continue to amaze me every time. Their positivity, their enthusiasm, for the job that they do and undoubtedly they're the ones that are driving the great performance that we have the pleasure of reporting. Thank you all for joining and wish everybody obviously compliments of the season. Thanks for your support.