Watches of Switzerland Group Q4 Earnings Call Highlights

Key Points

• Watches of Switzerland reported fiscal 2026 sales ahead of guidance and consensus, with group sales up 13% in constant currency to GBP 1.83 billion and adjusted EBIT expected at GBP 152 million to GBP 155 million.
• The U.S. was the key growth engine, with sales up 24% to GBP 1.24 billion and now representing more than 50% of group sales, while the U.K. market was described as stable and improved in the second half.
• The company guided for fiscal 2027 growth of 5% to 10% in constant currency and margin expansion of 40 to 80 basis points, citing better pricing conditions, operational leverage, and continued momentum in pre-owned and Roberto Coin businesses.

Watches of Switzerland Group LON: WOSG said fiscal 2026 sales came in ahead of guidance and market consensus, driven by strong momentum in the United States and improvement in the United Kingdom during the second half.

Chief Executive Officer Brian Duffy said group sales rose 13% in constant currency and 11% on a reported basis to GBP 1.83 billion. The company expects adjusted EBIT of GBP 152 million to GBP 155 million, also ahead of expectations.

Duffy said the company delivered the results while navigating “changing import tariffs, gold price inflation, and some other challenges,” crediting employees for managing through a volatile year.

U.S. Becomes Larger Part of the Business

The United States was the main growth driver. Duffy said U.S. sales reached GBP 1.24 billion, up 24% from the prior year, and that the market is now more than 50% of group sales. He called that “a major milestone” achieved eight years after the company entered the U.S. market.

Duffy described the U.S. luxury watch market as the largest and fastest-growing major market globally, while still “underdeveloped.” He said demand has been supported by the high-income consumer, which has benefited from increases in wealth, mainly due to appreciation in financial assets.

The company also highlighted momentum in U.S. luxury jewelry. Duffy said the Roberto Coin wholesale business grew 22% in U.S. dollars for the year. He said the brand performed well in Mayors stores in Florida, in three new mono-brand boutiques, and through its new website. He also said the acquisition of Deutsch & Deutsch’s four stores in Texas “has proceeded well” and that the business is performing well.

U.K. Market Seen as Stable

In the U.K., Duffy said sales improved in the second half and described the luxury market as stable. U.K. sales rose 5% for the year, with a stronger performance in luxury jewelry.

Asked by UBS analyst Chris Huang about whether easier first-half comparisons could lead to acceleration in the U.K., Duffy said the company does not split guidance by market. However, he said the company is carrying “good momentum” and sees the U.K. market continuing to be stable.

Duffy cited the performance of the Bond Street Rolex flagship store, the company’s U.K. e-commerce business and jewelry as areas of strength. He said the company views current conditions as better than in the past couple of years, despite broader political disruption.

Fiscal 2027 Guidance Calls for More Growth

For fiscal 2027, Watches of Switzerland guided for constant-currency sales growth of 5% to 10%. Duffy noted that fiscal 2027 will have 52 weeks compared with 53 weeks in the prior year; adjusting for that, he said the guidance would be 7% to 12% growth.

The company also expects profitability to improve by 40 to 80 basis points compared with fiscal 2026.

Chief Financial Officer Anders Romberg said the improvement includes a benefit from the non-repeat of a Roberto Coin-related write-off associated with Chapter 11 proceedings, which he said are now closed. He said most analysts had estimated that item at about GBP 3 million to GBP 4 million. Beyond that, Romberg said margin expansion is expected to come from operational leverage, consistent with how the company has historically improved profitability.

Duffy added that brand mix and ongoing review of the store portfolio are also contributing factors.

Tariffs, Pricing and Product Mix

Management said tariffs and gold prices affected pricing during fiscal 2026, but the situation has become more favorable heading into fiscal 2027.

Romberg said the company has seen “less aggressive pricing” from brands this year than last year, when brands were responding to tariff costs and a sharp increase in gold prices. He said the company’s guidance includes pricing that has already been announced, but does not assume future price increases.

Romberg gave Cartier as an example, noting that the brand raised U.S. prices by 10% in September of last year, which benefits Watches of Switzerland in the first half of the new fiscal year. He said growth in fiscal 2027 will be driven by a mix of price and volume.

Duffy said Watches of Switzerland does not directly pay tariffs on watch imports, because those are paid by the brands importing the products. However, he said tariffs matter in discussions with suppliers around pricing, margins and projects. For Roberto Coin, he said the company is directly involved in importation and has made applications related to the tariff situation.

Pre-Owned and Roberto Coin Expansion

Goldman Sachs analyst Adrien Duverney asked about pre-owned watches and Rolex Certified Pre-Owned. Duffy said pre-owned is performing at least in line with expectations, and “maybe even a wee bit better.” He said Rolex Certified Pre-Owned is available in all U.S. doors and will be added to a few remaining U.K. doors during the fiscal year.

Duffy said the pre-owned category, including Rolex Certified Pre-Owned and other brands, is effectively the company’s second-largest brand category. He said it has been a particular success at Bond Street and has contributed to growth over the last couple of years, including fiscal 2026.

Romberg said the team is improving in procurement and stock management, adding that “the health of our inventory has never been as good as it is today.” Duffy also said the pre-owned market has become stable from a pricing standpoint after volatility in 2022 and 2023.

On Roberto Coin, Duffy said the company is pleased with the integration and collaboration with the brand’s teams in Italy and the U.S. He said three mono-brand stores are currently operating, with a fourth planned for Tampa, and that the direct-to-consumer website is performing well.

Duffy said Roberto Coin’s expansion within Mayors stores has been “extraordinarily” successful, with the business in those stores more than doubling. He said the company is using those results in discussions with wholesale partners, including department stores and independent retailers, to secure more space and support future expansion.

In closing, Duffy said the company enters fiscal 2027 with greater stability and confidence. “We are now more than 50% U.S. business,” he said. “It is the best market to be in right now.”

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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