Watches of Switzerland sales hit record as US becomes top market
Watches of Switzerland delivered record fiscal 2026 profit as the U.S. overtook the U.K. as its largest market, signaling a successful geographic pivot despite margin pressure from tariffs and gold prices.
Watches of Switzerland Group posted record fiscal 2026 results, with statutory profit before tax surging 75% to GBP 133 million. Group sales increased 13% in constant currency to GBP 1.828 billion, while adjusted EBIT rose 6% to GBP 155 million. The performance marks a "record year" for the luxury watch retailer, with revenue compounding at an annual rate of 15.5% between fiscal 2015 and fiscal 2026.
The primary engine for this growth was a structural shift across the Atlantic. The U.S. surpassed the U.K. to become the group's largest market by both revenue and profit, accounting for 51% of total sales. U.S. revenue grew 24% in constant currency for the year, accelerating to 27% in the second half. Chief Executive Brian Duffy noted that growth was broad-based, fueled by underlying demand, e-commerce expansion, the pre-owned watch segment, showroom investments, the acquisition of Deutsch & Deutsch, and the Roberto Coin brand.
This geographic rebalancing proved necessary as the company navigated a "complex and changeable" macroeconomic environment. In the U.K., sales rose a more modest 5%, constrained by continued consumer pressure. Furthermore, 95% of the group's sales are domestic, and U.K. international sales have stayed severely limited since the abolition of VAT-free shopping following Brexit.
For market participants, the critical takeaway lies in the tension between top-line growth and margin pressure. Adjusted EBIT margin slipped to 8.5% during the year. Management explicitly blamed this contraction on product mix shifts, the impact of U.S. tariffs, and elevated gold prices, which increase the cost base for jewelry and watch manufacturing.
Looking ahead, the company's guidance will serve as a litmus test for investor confidence. Despite ending the year with low leverage, Watches of Switzerland reaffirmed its fiscal 2027 targets. The retailer forecasts 5% to 10% constant-currency sales growth alongside 40 to 80 basis points of margin expansion. Achieving this margin recovery in the face of persistent tariff and commodity headwinds will ultimately dictate the stock's trajectory.
