Earnings Call: H2 2020

Aug 13, 2020

So good morning, everyone. Welcome to our Watchlist Switzerland Financial Presentation. My name is Brian Duffy. I'm the CEO of the group, and we're going to be presenting today our final results for fiscal year 2020, our trading update on the first quarter of fiscal year 2021, which has just ended, and then our guidance for the full year fiscal 2021, which we've just formed. Delighted to be joined by 3 of my colleagues today who'll be joining me making this presentation. So first of all, Craig Bolton. Craig is our Executive Director responsible for the U. K. Business. We have David Hurley joining us from the U. S. David's our Executive Vice President responsible for the U. S. Business. And then we have our Chief Financial Officer. I'm sure many of you recognize and know Anders Romberg. He'll be taking us through numbers and guidance as we go through. Just before we go to the slides, I'll just make a couple of introductory and I think important comments. We're very pleased with our performance both for the fiscal year and for the Q1 of this new fiscal year. I think we're proving just what a great category that we are fortunate enough to be in of the world of luxury Swiss watches, very, very resilient category. And clearly, within that category, our model is working well throughout this period. I think very importantly, our multichannel approach, where we have a great combination of fabulous stores with great teams, which we complement with our online business and support the whole thing with tremendous marketing, particularly digital marketing. So we're very happy with these unusual circumstances what we've achieved, and I hope you feel the same when we go through our presentation here. So looking at first slide, fiscal year 2020. Our strategy obviously is working. We were having a tremendously strong period leading into when lockdown happened in mid March. It was week 46 of our financial year. Very strong in the U. K, gaining share, doing well. We are particularly chuffed about how well we were doing in the U. S. We haven't been there a long time, but I think the great performance we were delivering, 35% year on year growth in the U. S. Really shows or showed the success of our strategy. It was very broad based. Our acquisitions and mayors and wind working very well. Our new builds in New York working well. The team doing a fantastic job overall. So in such a short time to have this strong momentum in the U. S, we feel is a great accomplishment by David and his team over there. We have gained market share, as I'll show you, both in the U. K. And in the U. S. Our marketing is really working. We've attached to the appendix of our report some market research information that shows the progress that we've made and awareness in the U. K. And the amazing awareness that we've established in New York in such a short time. So great stuff, but obviously, along came COVID that really influenced all business in all of our lives. Despite that 6 weeks of lockdown, we still actually produced record results overall. Our sales before adjustment, our sales were up 5.9%, which is comparable. Our EBIT was up 7.8%, and we're now reporting a ROCE calculation, which year on year showed a progress of 110 basis points. So very happy that performing well in all of those financial KPIs. In terms of market share in the UK, we measure that we've made a 200 basis point improvement in our market share, taking us up to 37.2%. It's actually an acceleration of market share gain from what we've done on average over the previous 5 years. Ecom, we even were ahead of that, 330 basis points improvement in ecom to give us a share of 43.7 percent. These numbers are all calendar 2019. But we would add that in the first half of calendar 2020, ecom business actually increased our market share of 48%, so almost half of the market. And I think we believe it has progressed even since then. In the U. S, our market share went from 6.8 percent to 120 bps up to 8%. I'd just point out the obvious that we're obviously not present in all of the U. S. These are national statistics, and we enjoy a bigger share where we are in Florida, Georgia, New York and Nevada. So lockdown, totally unpeecient to the circumstances for us all, I know. But I think our teams and our business really responded very, very well to these unusual circumstances. We're very active in clienteling. We have long waiting lists. We have a great database of clients, and we were able to reach out to these clients, keep engaged with them and even take preorders for when we're reopening. So very productive and very positive interactions. Ecom, clearly, the market moved in favor of ecom, and we didn't just sit back and accept that. We actually got behind ecom, spent more money on marketing and driving our presence and market share there. We stepped up our engagement with our brand partners and who we depend for our business, particularly around new products. And there was a lot of activity on new product launches that Kriegel mentioned more in his presentation. But we took the opportunity of engaging both on the introduction of the new products and the plans to bring the products to market in the balance of the year. Digital obviously was key, and clearly, we've got great resources, great experience on digital, and it really come into its own as a medium during these unusual circumstances and a great impact from that. We are doing everything virtual, of course, interacting with our teams, interacting with one another, but also interacting with the consumer base out there. The image that I have on this slide here that you can see is us introducing a new exclusive product. And we have on screen there a presentation from London, Tokyo and New York as we presented to a good number of press in the U. S. Then our teams were really inspirational during this time. We loaded up a lot more training opportunities teams really just gobbled them up. They were learning everything about what they sell and even learning about brands that they don't sell just to improve the education and great response. We also had a lot of social interactions with our team, keeping everybody communicating with one another with a virtual pub in which we had quiz nights and gigs and all kinds of fun. And we kept the team continually up to date with our view of what's happening with our business. We were really delighted from the beginning. We said to our team, we want to keep everybody employed. We want to keep everybody fully paid, and we hope we'll be able to do that. And we're delighted at the end of lockdown to confirm that. In fact, that's what we did for all of our teams. And we were preparing for reopening almost from the day that we closed, and we knew that it was going to be very different on reopening, and we wanted to get ahead of the game. And we really were ready to reopen months before we were eventually able to do it. All that preparation and training, I think, put us in a great position for the reopening when it came. And in this chart, we're looking at our sales performance for the Q1. May, as you can see, we're more or less closed, and then we started opening progressively. End of May through June, U. K. Was mid June and July before we got most of our store network open. So what we've done just to help you understand the performance, first of all, we're showing here our sales by month, U. K. And U. S. Separately. We've also done a calculation of saying had we been open for all of the hours that would have recognized normal opening, what would it have been, what will we actually open. So in the case of the U. K, we're seeing in June, we were only open 34% of the hours that would otherwise have been available, 78% in July. And if you look overall in total, 10%, May 40%, June 74% in July. And our total group was effectively open for 38% of the quarter. Then traffic was down on average probably 50% since reopening. So only open 38% of the time with 50% of the traffic. And given those conditions to be delivering our sales performance, there's only 27% down and in fact showing growth for the months of during July, we think, is extraordinarily good. Obviously, e commerce performed well during that time and actually in the month of May when we're fully locked down, 118% and then gradually reducing as the stores open, but for the quarter overall up 79%. Our debt, I'll mention too, below £100,000,000 down to £91,000,000 overall, and our finance team clearly did a great job of managing cash during this period. This next chart, we're comparing the makeup of our sales, quarter 1 2021 against quarter 1 2020, and it's pretty remarkable. Quarter 1 is when we have most of our tourist business for the year. And if you look at quarter 1 fiscal year 2020, 33% of our sales came from the combination of tourism and airport traffic, which had all but disappeared in the last quarter that we're looking at only 3%. So we went from 33% to 3% from those segments. But our domestic business effectively filled the balance overall, particularly our domestic business in the U. K. And particularly our regional domestic business in the U. K. So just proving as we presented continually that we're very much in a supply driven business and demand continues to significantly exceed supply, so we're able to move the products around and take advantage. When we look at the balance of our fiscal year 2021, we are looking at what we think will be a gradually improving situation through to the end of the year. And we do think that our capabilities and position in the market is going to position us well to continue to gain share. 1st and foremost, we think the situation of demand exceeding supply for key brands, Rolex, Patek and Audemars in particular, will continue throughout this year, in fact, for the indefinite future. Digital and marketing and social media are clearly very, very important in these unusual circumstances. And again, I think we're very advanced in how we use that media. Multi channel, very important, the combination of online and stores overall and an increased engagement with our brand partners, particularly new products, we think is going to serve us well in the balance of the year. And then our technology, our SAP based system is driving our CRM. We've now adapted them to support systems driving our CRM. We've now adapted them to support remote selling and appointment management. And again, just having that technology gives us the flexibility and ability to respond. So we really think we're well positioned to, if anything, accelerate the market share gain in the remainder of fiscal 2021. And with that, I'll pass over to Craig. There you go, Craig. Thank you, Brian. So good morning, everyone. It's my objective in the next few minutes to take you through the key initiatives we have running here in the UK. Just first and before we do that, I just want to say the UK division is really well poised for further growth. Our structure here is really well established and very effective, both from a retail standpoint and also from a support center standpoint. We've transformed our business in the last 6 years in terms of stores and product and marketing. And as you've already heard, our product luxury watch share continues to grow as it did last year up to 37%. I want to cover first just one slide on COVID-nineteen to kind of box that off. We had a real media focus when COVID hit and lockdown happened in mid March. We really wanted to look after our team members, and the care and well-being of them was really paramount for us initially. We then really enhanced our communication both to our team members and to our clients to keep them engaged throughout that period of time. And we instantly turned to adapting our business to what we thought was going to be that post COVID world of retail. And so we did a great job with that. In parallel to all of that, we wanted to maintain sales and profitability where we could. The 2 key areas for this was our enhanced clientele in, where our teams use the very best CRM tools they've got to drive and pre sell luxury watches that the consumers then picked up post the lockdown. And then, of course, online sales really motored through that period of lockdown, finishing the quarter at plus 79%. On the next slide, though, we didn't settle down into just the day to day running of our online business. We really wanted to focus on new initiatives too during that period of time. This slide shows a number of initiatives we had going. 1 was really to increase the luxury brands that were transactional on our websites. You can see here 6 new brands entered our websites during that period of time. And the likes of Panerai and GLC and Vacheron are now transaction across all three of our websites. We wanted a new process through our websites to allow consumers to preorder and also register interest for new product in advance of that product being launched. So again, creating a pipeline of sales prior to that product actually coming out. And then as far as Luxury Watches is concerned, we really wanted to emphasize watcherswitzerland dotco.uk. And we ended into a significant digital marketing program at the beginning of May, really driving traffic and conversion to this site. And that will form part of a much wider initiative we have for the rest of our fiscal year 2021. So as stores started to open, you can see on the next slide, the effect on traffic, probably no great surprise here, but malls, London and Heathrow traffic was significantly down year on year, as you've heard. Really, it didn't matter as much to our business. Our productivity levels remain very high. Conversion was a multiple of what it was prior to lockdown, and our teams did an unbelievable job with our CRM systems in terms of driving their own traffic. The international business was down 92% as measured from premium tax refunds in quarter 1. We're expecting a similar level, actually a drop for quarter 2 as we go through the summer period. And again, our teams will continue to clientele to cover that loss. What we've proven through this period of time is our domestic and regional businesses are super strong and can more than cover the loss that we're seeing from the international traffic. But what we are aware of going forward is we will have to do even better job in driving our own traffic, and we believe the technology we've got here in the Watcher Switzerland group is going to allow us to do that. The teams have great CRM tools to allow them to drive that one to one clientele and on a daily basis in the stores. Our web enables facility in the stores allows our team members to really assist our clients to purchase online. And the focus that we've got on digital marketing versus traditional marketing just really allows us to reach more of our consumers and they're a much more engaged and loyal audience as we found. So we're going to invest further in that channel. And then our latest development by personal appointment was our new appointment system, allowing clients to book in store, telephone and virtual Zoom appointments. We launched this on the 6th July and already it's forming a significant part of our footfall. Over 40% of the traffic coming to our stores now are pre booked appointments by our teams. So as stated previously by Brian, new product really is the lifeblood of our business. And we did think when COVID hit and production was affected for the brands that, that would be less impactful in 2020. But as actually as proven 2020 and into 20 21 now, we're very confident new product is going to be excellent. We're expecting upwards of 400 new products to be launched here in the UK with these brands. Rolex is going to be very significant for us. Their new product launches on the second September, we get to see it on the second September. And all of these other great luxury brands have either launched or are launching pre Christmas, exceptional new product and much better than we could ever have hoped for. So we're going to put a BRIGS360 marketing plan behind all of that through all of our digital channels in terms of marketing. We've created a new e learning platform for our teams to go on and learn all about this new product. And of course, we won't be running in store events this calendar year for sure, but we are now getting used to running very effective virtual events as you can see here in the bottom right when we launched the new Hublot exclusive. Our estate remains really critical for us and investment in that estate is going to continue into the fiscal year 2021. Our focus remains on our Rolex stores and the expansion of Monobrands. We really believe in the high streets, and we really believe that people still want to come to our luxury showrooms to see this product. And of course, with Rolex, they have to come to our stores to see the product. So just starting with Fraser Hart first on the next slide. We only purchased these stores back in February. They actually only traded for 2 weeks prior to lockdown. So we didn't really have much of an indication then of their trading. But since reopening and the support they've had from our group, these stores are all trading well ahead of expectations. They've all fully integrated into our group systems and the people feel very, very good. So we are going to develop and refit all of these stores in the next 2 years. The Kingston store, our Stratford store and Brent Cross store will all be refitted the early part of 2021. And Maffin Webb York, where we'll be looking for a relocation, will be done at the early part of 2022. And then we've been super busy the last few weeks opening new stores as it happens. This great store here on the next slide is the Glasgow Rolex Monobrand boutique we opened on the 27th July. It's only been trading for 2 weeks, but honestly, well ahead of any expectations we had for it prior to opening. The store looks absolutely amazing. I would encourage you to go and see it if you can. Early part of July, developed our MAP and Web Cambridge store. We actually doubled the footprint on this store, doubled the size of the store, built this beautiful Rolex lounge to the left hand side of the store, and again, trading well ahead of expectations. We continued the advancement in our monobrand estate. We opened 3 Tag Heuer stores within 3 weeks, firstly in Oxford here on the left hand side and then moved into Kingston and Watford. And we're very, very committed to the development of Monobrands as we move forward this year and beyond. And then we're going to be super busy pre Christmas still with more openings, more refits. This great store on the next slide is Knightsbridge. We took the store next door to our Worcester Switzerland store. We're building a beautiful Rolex lounge there, which will be visible from Brompton Road. We'll be refitting the entire ground floor and 1st floor with multiple shop in shop installs and then a beautiful VIP lounge on the 1st floor also. Also in November, we've got our new flagship store in Broadgate here in the city. It's a 6000 square feet showroom on 2 floors. Again, we'll have a Rolex lounge, multiple shop in shop installs across the store and also an Omega boutique attached to the right hand side of the store. And you can see the level of brands we've acquired for this store really is a fantastic array of Luxury Swiss brands. Just moving on to the monobrands that we're doing. This Tudor monobrands here, which is going to be open in the Westfield Centre in London here, will be the 1st Tudor monobrands in Europe. Tudor also developing new exclusive product for their monobrands. So we'll get that product here in the early part of 2021, and this will be the only store in the UK where you'll be able to get that product. In April next year, this new development will complete this new shopping mall in Edinburgh and St. James'. We're trying a new concept here with the Brightland and Omega mono brand in the same space with a shared back of house, a hugely productive space for us and looks absolutely fantastic, I'm sure you'll agree. And then moving through to Trafford Centre, where we're going to be opening this Taicoya Monobrand store just post Christmas. We already have a Brightland Monobrand in the center trading very well, and we have the same optimism for this store when it starts trading. So just to summarize, we believe whilst we've gained market share in the UK, we'll continue to do so. The significant investment we've got planned in capital for our existing state, but also in new stores will continue to elevate our store portfolio. Our focus on new product and exclusive product will continue to strengthen our brand partnerships, drive our sales, obviously, we'll continue to gain shares from that. Our continued investment online and marketing will continue to allow us to adapt to the change in face of retail and obviously reach more of our consumers in the right locations. And the CRM tools that our teams have got are really high level and really technically forward thinking and will allow us to drive our own traffic going forward and rely less upon what's happening in the High Street. So all of our initiatives here, I've just talked through, are all running. We're very confident with them all, and we feel very confident about fiscal year 2021. I'm going to pass over now to David. Thank you very much, Craig. So we're delighted with the progress that we made in the U. S. Against our strategic priorities, our results for FY 2020 and the strength of our business since reopening. I'm going to bring you through some of the key highlights since we've entered the U. S. Market, what we've accomplished over the last year and a little bit of what's upcoming. So just a quick refresher that actually we've only been retailing in the U. S. For less than 3 years, starting when we acquired Maers in October of 2017, which gave us a concentration of retail in Georgia, but also in Florida, which is one of the largest luxury markets and also gave us an experienced scalable support team, which is based in what is now our U. S. Headquarters in Fort Lauderdale. We then took over the exclusive luxury watch retailing in the Wynn Resort in December of 2017. And then follow that up with our first Watch of the Switzerland New York flagship opening up in SoHo in November of 2018, anchored by Rolex and Patek. Still, I think, probably the most spectacular store that we've opened up in our network and continues to go from strength to strength in sales versus prior year and since we reopened again in on June 22. And last but not least, our Hudson Yards flagship, which opened up in March of 2019. So the success of our New York business and the rest of the U. S. Group has been driven by innovative marketing and customer experiences. And all of that PR has helped drive both our overall brand awareness, but also expanded our consumer database. We've been beyond delighted with the store renovations that we've done with Mayer's and there's no better example of that than our store in Lennox in Atlanta. So we moved from within the mall to what we consider to be the best location adjacent to Louis Vuitton and Cartier. We also opened up there our first Audemars Piguet boutique. Lennox is a powerhouse store for us and traffic has been up over 100% since we've moved from our prior location. On the next slide, you can see our fantastic store in Merrick in Miami. Again, you can see the new store fascia, which was part of our design as well as the new Meijer's logo. And you can see the welcoming atmosphere from the other images within the store itself. Traffic here is up over 50 World Crime has increased for our consumers also. Last but not least, we also opened up in Avalon in Atlanta. We relocated from another mall that's just over 6 miles away. And again, both traffic and sales have increased as a consequence. So we continued to clientele while closed. The image on the left is one of our store team doing a hand delivery to one of our clients in Florida. We began reopening our stores again on May 7, starting at Atlanta and our teams were prepared with new operational procedures and the response from our consumers has been fantastic. Okay. So we continued with our innovative marketing, launching our Grand Seiko exclusive on May 14 to over 80 international journalists. We also utilized AR functionality, so our consumers would be able to wear the watch virtually on the wrist at home and the response from both press and PR has been phenomenal. So in terms of future growth, we're going to look to replicate the success that the U. K. Has with monobrand boutiques, and we're going to be opening up the first of a series of monobrands in November of this year. We're going to continue to refurbish our Merr stores, building on the success of the refurbishments already done. Our next one up is Aventura, which is probably our most successful store in Miami currently. We're adding an extra 2,000 square feet to the store and we're also going to be opening up our first Boogarry mono brand. And we'll be following that up in fiscal year 2022 with a new location, the American Dream project in New Jersey in the Meadowlands. So we believe the U. S. Market is well positioned for long term growth. It's still very fragmented. We don't enjoy nobody enjoys the market share that we have in the UK. And we're going to continue on the strategy that we've pursued to date to drive future growth. So we're going to continue on our refurbishment program for the Mera stores. It's already been very successful. We're going to continue to open up new projects such as expanding mono brands across the U. S, the American Dream project that we're opening up in the next fiscal year. We're going to continue to identify new white space locations like we did with Soho that we turned into success. We're obviously going to drive e commerce over the course of the next couple of years. And we're going to again take a look at other potential acquisitions where we feel that it makes sense. So with that, I'm going to pass you over to Anders. Thank you, David. So we're very pleased to announce that we had yet another record year in the group. Our sales came in at plus 4.8 on prior year. Up until the lockdown, we were blowing it out of the park, growing by 15.8. Percent. And obviously, the last 6 weeks of the year, we had a bit slower growth. In terms of the growth, it came predominantly out of Luxury watches, which was very positive throughout the year. We saw our average selling price in the U. K. Grow by 11% and in the U. S. By 9%. Very pleased with the refurbishment program in Mayers, where we're trading well ahead of where we had expected. Our net margin throughout the year expanded by 0.1% in spite of having a high penetration of Luxury Watches. That's been offset by less customer incentives throughout the year. Our showroom costs, again, on a 4 to 6 weeks trading period still leveraged on prior year. That leverage would probably have been a bit better if we would have traded throughout the year, but we gained another 0.3% out of this throughout the year. Our overheads was up throughout the year. We spent another €2,500,000 on marketing, prominently supporting our U. S. Business as well as our e comm business. In addition to which, we added some structures in to support our business as a public entity. Our opening and closing cost was down year on year. Last year, as you recall, we opened up our 2 big flagships in New York. So the opening and closing cost last year was somewhat inflated versus what we've experienced over the past few years. Our adjusted EBITA margin came in at 9.6%, which is 0.7% ahead of last year. We're very, very pleased with that, I must say. And our adjusted profit before tax came in at 49.4 percent or plus 86.5 percent on last year. So all in all, a very good year, I think. In terms of our balance sheet, the goodwill increase relates to the acquisition of Fraser Hart, as you've heard about. In terms of other movements that I want to point to is our inventory went up about €42,000,000 on the year, and that related to good intake of high demand products in February March leading into the lockdown, so not a big problem, inventory as such. Our stock churn in the year was 1.9 in total versus 2 of prior year, and that is in spite of losing 6 weeks of sales. So obviously, somewhat inflated this year as a consequence of that. Our trade payables is mainly a reflection of our intake of inventory. And in terms of receivable, obviously, we focused a lot on cash management as we went into the lockdown and throughout the lockdown. So we had scaled back on our in house program throughout the year in the U. S. So that is actually now fully terminated. We're not offering in house credit since July this year. And also we didn't prepay our rents as previously done in 2019. So obviously, we had a cash benefit as such. In terms of financing, we did replace our bond as part of the IPO, and that was replaced by a much more favorable term loan and RCF and an ABL. In addition to that, we've layered on post year end an additional facility of €45,000,000 And the reason for that is simply because we wanted to have enough headroom in case the lockdown was going to be extended throughout the next very long period of time. So it was more a defensive mechanism than we haven't utilized it. In terms of our cash flow in the year, our operating cash flow came in at 65.7%, and that is slightly down year on year. And the main driver of that is obviously the increase that we've seen in inventory throughout the year. In terms of CapEx, we spent $28,700,000 slightly below what we guided towards before. Obviously, we didn't have any CapEx expenditure during the lockdown because everything was in standstill. The remainder of our finance structure is a result of our refinancing. Now to the guidance. We are looking at this fiscal year with some degree of confidence, I must say. It's going to be on a 53 week basis. The Q1 trading has been very encouraging, and we obviously haven't been open throughout the whole quarter. But still, we traded ahead of where our initial expectations were. In terms of assumptions that we're building our plan on is obviously that there's going to be a continued strong demand in the domestic market, both for luxury watches, both in the U. K. As well as in the U. S. We do not expect any further national lockdowns nor in the U. K. Or in the U. S. Throughout this year. We don't expect any significant reduction in production during the year. And obviously, so no major impact expected on that. However, we do expect to see further localized disruption as we've seen in the first quarter with Leicester and Atlanta and Georgia being impacted as examples. We think that demand is going to continue to exceed the supply in our domestic markets of the most sought after brands. In terms of traffic flow, we do expect our airport business and tourism to moderately improve throughout the year, but it's going to be slow and gradual. We also have the benefit of the acquisition of Fraser Hart that we completed at the back end of last fiscal year as well as some additional projects as you've heard earlier in this presentation. That will take our guidance to sales of about 8.40 percent to 8.60 percent or plus 4% to 6% on this year. We do expect our EBITDA margin to remain flat year on year. Our depreciation and amortization is expected to come in between €21,000,000 23,000,000 Our finance cost is projected to be €5,300,000,000 to 5.8 Just as a side note, €1,700,000 of finance cost this year was incurred in relation to the old bond. Our tax rate is expected to come in between 21% 22.5% as we shift more profit into our U. S. Business that is outgrowing. Obviously, the tax rate there is a bit higher. Capital expenditure is Obviously, the tax rate there is a bit higher. Capital expenditure is planned to come in between €28,000,000 32,000,000 throughout the year, and our closing debt is projected to come in between €90,000,000 €110,000,000 I will now hand over to Brian for some closing remarks. Thanks, Anders. David and Craig, thanks for your presentations. Just a couple of final concluding remarks. I mean, clearly, our strategy is working. We see no reason to change it at all, and we are going to carry on investing and maybe counter to what's happening elsewhere in the market. We are going to be opening stores. You've heard the formats that we'll be doing for stores. We really believe in our format or multichannel approach overall. We think the market is going to gradually improve throughout the year, but even at the end of the year, we'll not be back to 2019 levels. We think that's probably calendar 'twenty two at the earliest before we would see all that coming through. But we're just very well positioned in this market with our technology, with our position, with our market share, and we think we'll gain share during the balance of our fiscal 2021. And then finally, just to say that if there ever was a time for the team spirit and focus and commitment to be shown, then our team really stepped up during lockdown and since and take a lot of credit for the great numbers that we are delivering today. So thanks for your attention. And with that, we'll move over to the Q and A. We have our first question from Louise Singlehaus from Goldman Sachs. Louise, please go ahead. Hi, good morning to all. Thank you very much for all the detail that you provided there, particularly the run rate during Q1, very helpful. I wonder if you can just help us think about the U. S. Growth and the outlook. Obviously, incredibly strong as you saw that number at the back end of the quarter. I suppose just trying to contextualize how much you think is the pent up demand, but also if you think it's obviously a sign of the branding initiatives being probably ahead of the original plan. And also for the U. S. Market, if you can help us think about potential, I know we will talk about how fragmented the market is, the potential for share probably coming a little bit sooner given the results of the impact of COVID-nineteen? And then just secondly, I wondered, particularly Brian, if you can just help us think about the negotiations with brands for the look for the product. Obviously, it seems you've highlighted that you've got the new launches coming in from Rolex, I think September 2. Presumably, you have pretty good view of the allocation you're going to get given the guidance that you've given for the full year. But can you just help us think about the product that you're getting not just from Rolex, but from the other brands and as well that'd be really helpful? Thank you. Okay, Louise. Thanks for your question. We clearly, as we've reported, have great momentum in the U. S. Market and that we're very, very pleased about. So week 46, as you know, we were running at plus 35 for the year overall, and that was ahead of where we expected to be. Our reforms, in particular, that we had done in Mayers exceeded our expectation overall. So we're feeling very, very positive about the U. S. Market. Clearly, Q1, the U. S. Has again been outperforming overall, and that's great to see. So there's no question that the demand is there. There's no question that our approach to the market and the investments that we're making is stimulating further demand. And everything is good. The big question is our ability to get supply to respond to that demand overall as it is here in the UK. So our situation just to move on to supply overall situation remains as we've been reporting it. Clearly, we're pushing and use every opportunity we can to justify increased supply into our market. The biggest single thing that we do that does get us additional supply is investment and expansion overall. So the projects that we have in place are all on the basis of getting additional support to make them effectively work. So these conditions haven't changed, but our view of the global market is that there's probably been a bigger decline in sales through because of the absence of tourism from the global market than there has been on production overall. Production there was a lockdown in Switzerland, production affected anywhere between 15% 25%. So at a global level, we think that should translate to there have been a wee bit more product around. Are we seeing that? We do have any confirmation on that at this stage, not really. But we have as much visibility as we've ever had. Obviously, we have a in a very short term, the next 6 or 8 weeks being where we are. And I think overall, we're in pretty good shape on supply, but supply is the biggest constricting factor for growth. And our demand overall is greater than we might have predicted a year ago, particularly because of the kind of dynamic success that we're having in the U. S. Great. Thank you. Yes, I'd ask about the other brands too. Satish, again, remains the same. What I just said applies to kind of Rolex, Patek and Audemars. And can I just ask in terms of the like the percentage of to be on a wait list in terms of products or how big the Rolex business is now? Thank you. Yes. But I mean overall, I think we've had some kind of comments or questions of have we used the waiting list during this time and effectively just it, but honestly not really. We've never taken names. We don't want to take names of people that may have to wait 2 or 3 years. We want to manage expectations overall. So our rate list remains as kind of buoyant and healthy as it's ever been UK and U. S. It's fair to say that these brands, I mean, in total, luxury watches have become a bigger part of our business as the numbers you have the numbers there to see that. So that trend continues overall. And our top 7 brands, UroLX, Patek, Audemars, Cartier, Omega, Breitling Tag, those top 7 brands have an even bigger share of our business overall. And within that, yes, Rolex continues to outperform overall as part of our mix. Great. Thanks for the color. Welcome. Thank you, Louise, for your question. Our next question is from Greg Lawless from Shaw Capital. Greg, please go ahead with your question. Good morning, guys. Well done on the numbers. And just a couple for me, if I could. Could you just talk about the pricing outlook in terms of inflation? And could you just remind us with the last kind of consumer recession, kind of how resilient the business was during kind of a consumer downturn? Thank you. We are not anticipating or we haven't built into our thinking of planning any price increases. There are price increases affecting this year. There was an increase in Rolex that went through in January. In the UK, just over 7%, in the U. S, 3%. There was an increase in Omega that's come through as well. So they will impact this year and they are considered in the guidance that we've given. But beyond that, we haven't considered that there could be further price increases. The last 2,008 UK market was reasonably resilient in the sense that it didn't go down. It had been growing well going into the financial crisis, but was effectively flat during that period. It was before our time with the group, but this group here continued to perform reasonably well during that time and kind of maintain profitability and so on. The conditions today are much more greater today than it was then. So back then, greater today than it was then. So back then, the market went down because demand went down because people weren't traveling and the local financial crisis as well. I think if it happened, I think as our numbers are testament to what happens today, there's more than enough others that are waiting to effectively fill the gap as we are doing in this quarter. We're way down on international business, as you've seen. And yes, with complete compensation for it by domestic consumers getting the opportunity to buy overall. So I think we're looking at different conditions and the supply situation remains a critical factor. Thanks very much. Thank you, Greg, for your question. Our next question is from Russell Higgins from Barings. What was the estate growth, including M and A? Could you please give us a better sense of L4L sales growth in quarter 1 and FYL4L guidance? Thank you. We've actually not guided or for that matter disclosed our like for like. Obviously, the state was closed for 6 weeks. So and on and off stores were open. So it's just really hard actually to gauge what the like for like is for this last quarter as well, obviously, for the fiscal year of last year where we had the same disruption at the back end. So we haven't disclosed that. In terms of the state, obviously, we acquired the 4 Fraser Hart stores at the back end of last year, as you are well aware of. We also sent on R and S, what we think those will contribute in our business over the next 12 months. So that is also out there. So those numbers are publicly available. Other areas of estate growth is predominantly within the monobrand sector, where we opened a few monobrands, which we're very pleased with. In addition to that, the big win of the year, I think, from a capital expenditure point of view has been in the mayor's state, where we obviously completed 4 refurbishments and relocations, which all have worked out actually ahead of what I was expecting to do. So we're very, very pleased with that. For the coming year, if you look at it out in 2021, the major projects that we are doing in this year, obviously, we're continuing our expansion within the mayor. So we're doing Aventura as we speak. And that's going to be a huge expansion of Rolex within that location. So that's going to be a good addition to what we do. We're looking at Boca Raton at the back end of the year. We're also expanding in Knightsbridge, where we're taking the adjacent unit, where we're expanding again with Rolex into a fantastic space. So they get their own room with their own frontage. So that will be good. And then we obviously have Broadgate that is coming on stream in November of this year. So those are the major projects that we're looking at. And Rolex boutique in Glasgow that we just completed. Everybody seems to forget about Glasgow. I don't know why that would be, but we've done a beautiful store that we opened in 27th July as a Rolex boutique in class. It was the first one in Scotland and it looks amazing and it's performing very well. Thank you. Our next question is from Richard Taylor from Barclays. Please can you comment on what you expect to happen in the rest of the market in the U. K. And U. S? Are you seeing capacity fall yet from other less well financed operators? And how would you expect this to change as the year progresses? Good question, Richard. And we've hopefully pointed out in our presentation that we think sort of position and resources really advantages us during these market conditions. And by definition, those that don't have the sort of technology or situation. Digital has clearly become very, very important activity in social media, very, very important. If you see the awareness that we created in New York through some fabulous bold PR events and activity, but very much amplified through digital and social mechanisms. That's how you have to operate today. I think multi channel is hugely important today. So going wherever the client wants to be shopping is critical. So whether that's a mono brand or an airport or online, whatever it may be, we are responding to those trends that are there. So we are investing. We're ambitious. We have scale. We have technology. We have in house skills and social media and all that. And by definition, other players out there, you could run through and see whether or not they tick all of those boxes that are there. And so I do think we are competitively advantaged and that advantage has definitely been accelerated by all of these circumstances. So I think it's a fair thing to say competitively what might happen with the rest of the distribution out there. I mean, fair to say that anyone who has a good brand portfolio, Rolex in particular, will be doing well too along with us. And we haven't specifically heard of any financial problems in the network. It's Cyclo's network has been always selective distribution. It's not broad scale. So we'll see, but we are certainly focusing on what our competitive advantages in these circumstances. Thank you. We currently have no further questions. We have no further questions. Okay. Well, thanks, Yamile. Thanks for helping us through the call. Thanks, everybody, for joining us. It's obviously unusual time that we're all dealing and including how we made this presentation. But I hope it's been informative and helpful. Thanks to my colleagues over here who did most of the work in delivering the numbers and the presentation. And we look forward to hearing from you all again soon. Thanks for joining us. Thank you.