Watches of Switzerland: U.S. Ascendancy and the Pre-Owned Pivot
Record FY26 as the U.S. becomes the largest market, margins squeezed by tariffs and gold, and guidance points to expansion in FY27.
WOSG.L · Earnings Call · 2026-07-14
U.S. Ascendancy and the Pre-Owned Pivot
Watches of Switzerland Group delivered a record FY26, with the U.S. market overtaking the U.K. as the largest revenue and profit contributor. Sales rose 13% constant currency to GBP 1.828 billion, driven by 24% growth in the U.S. and a 5% improvement in the U.K. The U.S. now comprises 51% of group sales and an even larger 62% of adjusted EBIT. This reflects a strategic shift that has been building for years, accelerated by the acquisition of Deutsch in Texas and the continued expansion of the showroom network. As CEO Brian Duffy put it: “the U.S. surpassed the U.K. in fiscal year 2026 as our largest market by revenue, reaching 51% of group share.” — Brian Duffy, Group CEO · 2026-07-14Margin Headwinds and One-Offs
Despite the top-line momentum, adjusted EBIT margin contracted 60 basis points to 8.5%, as the Product margin was squeezed by U.S. tariffs and surging gold prices. CFO Anders Romberg noted: “Net product margin was 70 basis points down versus last year, reflecting adverse product mix and a reduction in brand margins due to U.S. tariffs and significant increases in gold prices.” — Anders Romberg, CFO · 2026-07-14 The tariff landscape has been volatile; in the December 2025 call, management noted: “We are delighted that the tariff situation has improved from the 39% down to the 15%” — Hugh Duffy, Group CEO · 2025-12-04, yet the residual impact remains a headwind. The year also absorbed a GBP 3.5 million bad debt write-off on Saks, which management confirmed was included in adjusted EBIT and not treated as exceptional. Excluding that one-off, the underlying margin performance would have been roughly 40 basis points better.Pre-Owned and Roberto Coin: The Growth Catalysts
The certified pre-owned (CPO) business has scaled impressively. Rolex CPO is now available across all U.S. Rolex agencies, and the overall pre-owned category has grown to over 8% of sales, up from under 2% in FY19. CEO Brian Duffy emphasized the strategic importance: “It's now over 8% of our business. It was less than two when we started out in fiscal 2019” — Brian Duffy, Group CEO · 2026-07-14. The Rolex CPO roll-out has been a key driver, alongside robust demand for luxury branded jewelry. Roberto Coin has delivered a strong performance, with no churn in the wholesale network and a successful Dakota Johnson marketing campaign. The acquisition of Deutsch & Deutsch closed in January, with the founding family retaining a 12% stake—a model that has fostered a smooth integration.Guidance and Outlook
For FY27, the company guides to 5-10% constant-currency revenue growth and 40-80 basis points of EBIT margin expansion, underpinned by confirmed showroom projects and supply visibility. The first 10 weeks of trading are "encouraging," with the U.S. remaining strong and the U.K. returning to more normalized conditions. However, management remains cautious about macro uncertainty and currency moves, noting that a $0.05 move in the dollar affects sales by about $30 million and EBIT by $4.5 million.The company's ability to navigate the tariff and gold-price environment while expanding margins is a testament to its operational leverage and brand portfolio. As broad based momentum continues across both markets, the group appears well-positioned for sustainable growth. The conviction in the U.S. market was echoed a year earlier: “...there was a great love of Swiss watches and that demand has been not fully potentialized because of underinvestment in retail...” — Hugh Duffy, CEO · 2025-07-03 Now, with the U.S. leading the way, Watches of Switzerland is executing on that thesis.We are guiding towards revenue growth in constant currency of between 5% and 10%. We expect our adjusted EBIT margin percentage to expand by between 40 basis points and 80 basis points.