Watches of Switzerland Group LON: WOSG reported record fiscal 2026 sales and stronger profit growth, as gains in the U.S. helped offset a “complex and changeable” backdrop that included tariffs, higher gold prices, margin pressure and continued consumer pressure in the U.K.
Group CEO Brian Duffy said sales for the year reached GBP 1.828 billion, up 13% in constant currency from the prior year. The U.S. grew 24% in constant currency and became the group’s largest market by both revenue and profit, while the U.K. rose 5%. Duffy said performance improved in the second half, with group sales up 17% in constant currency compared with 10% growth in the first half.
Adjusted EBIT increased 6% in constant currency to GBP 155 million, while statutory profit before tax rose 75% year over year to GBP 133 million. Duffy said fiscal 2026 was a “record year” for the group, noting that revenue has compounded at 15.5% annually between fiscal 2015 and fiscal 2026.
U.S. Becomes Largest Market
Duffy said the U.S. accounted for 51% of group sales in fiscal 2026, surpassing the U.K. The company’s business remains largely domestic, with 95% of sales from domestic customers. Duffy said international sales in the U.K. have remained limited since VAT-free shopping was removed following Brexit implementation in 2021.
The U.S. business accelerated in the second half, growing 27% in constant currency. Duffy said growth was broad-based and supported by underlying demand, Roberto Coin, ecommerce, pre-owned watches, showroom investments and the acquisition of Deutsch & Deutsch.
The company completed the acquisition of Deutsch & Deutsch in January, adding four Texas locations. Duffy said the transaction used a new acquisition model under which the Deutsch family retained a 12% stake, with Tad Deutsch and Aladar Deutsch remaining in leadership. The acquisition added 60 colleagues to the group.
In the U.K., Duffy described growth of 5% as solid against a subdued market backdrop. The company completed seven key projects during the year, including work at Mappin & Webb in Birmingham and Northern Goldsmiths in Newcastle. Duffy also said the Rolex Old Bond Street showroom, which had its first full year of trading, performed ahead of plan and generated strong client feedback, including a Net Promoter Score of 93.
Margins Pressured by Mix, Tariffs and Gold Prices
Group CFO Anders Romberg said reported net sales rose 11%, or 13% in constant currency. He said net product margin declined 70 basis points, reflecting adverse product mix, lower brand margins tied to U.S. tariffs and “significant increases” in gold prices.
Adjusted EBIT margin was 8.5%, down 60 basis points from the prior year. Romberg said the decline reflected the product margin reduction and a one-off debtor write-off at Roberto Coin, partly offset by leverage on showroom costs and overheads. During the Q&A, Romberg said the write-off was GBP 3.5 million and was included in adjusted EBIT rather than treated as an exceptional item. In response to an analyst question, he confirmed the assumption that it related to Saks.
The effective tax rate was 26.7%, down from the prior year due to a one-off tax credit related to Roberto Coin. Adjusted earnings per share rose 9% to GBP 0.452.
Pre-Owned, Ecommerce and Jewelry Show Growth
Duffy said the pre-owned category continued to perform well, rising 22% year over year across the U.K. and U.S. In the Q&A, he said pre-owned now represents more than 8% of the business, up from less than 2% in fiscal 2019. He said Rolex certified pre-owned had been “a major catalyst” for the company’s broader push into the pre-owned market, but the group will report pre-owned as a category rather than only as Rolex CPO.
Duffy said Rolex certified pre-owned is available in every Rolex agency in the U.S., excluding the recently acquired Deutsch & Deutsch locations, and will be rolled out further in the U.K. as store design and space changes allow.
Ecommerce grew 21% in constant currency, outpacing the overall group. Duffy also highlighted the launch of an upgraded Hodinkee app with a shopping option through Watches of Switzerland.
Luxury branded jewelry also contributed to growth. Duffy said Roberto Coin sales rose 20%, while Romberg said Roberto Coin wholesale grew 22% in constant currency. Sales through the Mayors network more than doubled after upgraded Roberto Coin shop-in-shop presentations. Duffy said the company’s launch of lab-grown diamonds is “trading really well” in the U.K. and has now launched in the U.S.
Balance Sheet and Cash Flow Remain Strong
Romberg said the company ended the year with net debt of GBP 57 million and net debt-to-EBITDA leverage of 0.3 times. Duffy earlier cited net debt of GBP 56 million and return on capital employed of 18%.
The company generated free cash flow of GBP 162 million, with cash conversion of 80%. Romberg said inventory increased 2%, with underlying inventory flat year over year and the increase attributable to Deutsch & Deutsch. Average unit stock cost rose because of higher gold prices and U.S. tariffs.
Watches of Switzerland spent GBP 39 million on acquisitions during the year, covering Deutsch & Deutsch and the final payment for Roberto Coin. It also invested GBP 66 million in its showroom estate, completing 13 major projects. Romberg said the group completed its previously announced GBP 25 million share buyback in the first quarter, with GBP 14 million spent during fiscal 2026.
Company Reaffirms Fiscal 2027 Outlook
Romberg said fiscal 2027 guidance is based on a 52-week trading period, compared with 53 weeks in fiscal 2026, and visibility of supply from key brands for calendar 2026. The outlook includes confirmed showroom projects but excludes uncommitted capital projects and acquisitions.
- Constant-currency revenue growth is expected between 5% and 10%.
- Adjusted EBIT margin is expected to expand by 40 to 80 basis points.
- Capital expenditure is expected between GBP 60 million and GBP 70 million.
Duffy said trading in the first 10 weeks of the new fiscal year was encouraging, with continued U.S. momentum and the U.K. appearing to have returned to more normalized growth conditions. In response to UBS analyst Zuzanna Pusz, Duffy said the company was “a wee bit ahead” of what it had assumed in first-quarter guidance, but not enough to change the outlook. He cited possible timing benefits from product intake, tougher comparisons later in the year and continued macroeconomic uncertainty.
Asked about currency sensitivity, Duffy said dollar-denominated profits represent more than half of overall profitability. He said a five-cent movement in the dollar is worth around GBP 30 million in sales and GBP 4.5 million in EBIT.
Management declined to comment on speculative media reports about a possible approach to the company. Duffy also said the company has not built any expected pricing increases into guidance, noting that brand pricing typically occurs in January but can happen at other times in response to factors such as gold prices, exchange rates or tariffs.
About Watches of Switzerland Group LON: WOSG
Established in 2007 the Watches of Switzerland Group is the UK's largest luxury watch retailer, operating in the UK and US comprising eight prestigious brands; Watches of Switzerland (UK and US), Mappin & Webb (UK), Goldsmiths (UK), Mayors (US), Betteridge (US), Deutsch & Deutsch (US), Analog:Shift (US) and Hodinkee (US), with a complementary jewellery offering. Since 8 May 2024, the Group has also owned the exclusive distribution rights for Roberto Coin in the USA, Canada, Central America and the Caribbean.
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