On an outdoor walk with the Watch, with iOS9 (beta 3) location services set on the iPhone, the Watch Workout App reported (haptic and sound) a distance of 9KM about 300 - 400 metres from commencement of the activity. Thereafter the 1KM alerts were probably correct (i.e. from the position of the "9KM"), although the overall distance was 300 - 400 metres longer (plus the 9KM) than usually reported (pre OS2 beta 3): i.e. instead of the usual 4.2 distance the workout distance was "13.6".
I've reported this as a bug.