Record Profits, US Driven
Watches of Switzerland Reports Record FY Profit and Revenue, Driven by Strong US Growth
Anonymous
Key Points
1
US revenue rose 18% to £927m, representing 51% of group revenue, underscoring the US as the dominant growth engine.
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The flagship Rolex boutique on Old Bond Street has performed exceptionally well and is now among the leading Rolex retail destinations globally.
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Pre-owned watches performed strongly in the UK, contributing to signs of a UK recovery alongside showroom investments.
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Tariffs on Swiss watch imports in the US prompted price increases and changes to retailer margin structures, with some changes persisting even after tariff levels moderated.
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Reuters reported that Watches of Switzerland had held discussions about potential offers to take the company private, with management declining to comment on the report.
Watches of Switzerland posted record revenue and profit for fiscal year 2026, with sales climbing 11% to £1.83 billion and statutory pre-tax profit surging 76% to £133 million, according to Sharecast. The results were driven almost entirely by the United States, which now accounts for more than half of the group's total revenue.
The company also backed a positive outlook for FY27, targeting revenue growth of 5-10% and further margin expansion, even as tariffs on Swiss watch imports and cautious UK consumers posed ongoing headwinds, Investing.com reported.
US Becomes the Undisputed Engine of Growth
US revenue jumped 18% to £927 million, representing 51% of total group sales, according to ADVFN. That makes America the clear growth engine for the business. The UK, by contrast, has been softer — but it also showed early signs of recovery, helped by showroom investments and stronger demand for pre-owned watches.
The flagship Rolex boutique on Old Bond Street stood out as a particular highlight. Management said it is now among the leading Rolex retail destinations in the world. The Deutsch & Deutsch acquisition, a US jeweller the company bought last year, was also fully integrated during the period and added to the group's American footprint.
Tariffs on Swiss Watches Forced Price Hikes in the US
US tariffs on Swiss watch imports forced Watches of Switzerland to raise prices and restructure margins with brand partners. Some of those price increases stuck even after tariff levels eased back. The changes squeezed adjusted margins, which fell even as profits rose overall, Nasdaq noted.
Adjusted EBIT came in at £155 million, and adjusted EBITDA reached £202 million, according to Investing.com. Free cash flow was a robust £162 million, and net debt dropped to just £57 million. That financial discipline came despite the costs of integrating Deutsch & Deutsch and ongoing showroom expansion.
Pre-Owned Watches and Ecommerce Add New Growth Lanes
The group's Certified Pre-Owned program gained strong momentum during the year, particularly in the UK. Pre-owned watches helped lift UK performance at a time when new watch demand remained soft. Management called it a key part of the business going forward.
Ecommerce is also expanding to reach more clients beyond physical showrooms. The company's Xenia program, which targets high-value clients, continued to grow. Roberto Coin jewellery also picked up momentum. These initiatives give the group multiple ways to grow without relying solely on opening new stores.
Takeover Talk Swirls as Management Eyes FY27 Targets
Reuters reported that Watches of Switzerland held discussions about potential offers to take the company private. Management declined to comment on the report. The company's shares have been under pressure over the past year, which analysts say may have made it an attractive target for private equity buyers.
Despite the chatter, management stayed focused on execution. The FY27 target of 5-10% revenue growth would build on this year's record base of £1.83 billion. Leadership pointed to the US, pre-owned watches, and long-term UK improvements as the three biggest opportunities ahead, according to LSE.co.uk.
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