Watches of Switzerland Group Upgrades Sales Outlook Amid Margin Concerns

Watches of Switzerland Group (WOSG) has raised its sales guidance for the fiscal year 2026 following a robust trading period, particularly during the holiday season. The company now anticipates sales growth in constant currency to be between 9% and 11%, an increase from the previous forecast of 6% to 10%. This adjustment comes after the group reported strong demand for luxury brands, including Rolex and Patek Philippe, which continues to outstrip supply in both the U.S. and U.K. markets.

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The trading update for the 13 weeks ending January 25, 2026, highlighted broad-based growth across various categories and price points in the U.S., reflecting the effectiveness of WOSG's operating model. The acquisition of Deutsch & Deutsch, which includes four Rolex-anchored showrooms in Texas, further strengthens the group's presence in a key market, contributing to its optimistic outlook.

Watches of Switzerland Group upgrades guidance after rising sales and US acquisition

Despite the positive sales outlook, WOSG has adjusted its EBIT margin guidance, now expecting a decline of 70 to 90 basis points, compared to previous expectations of flat to down 100 basis points. CEO Brian Duffy attributed this adjustment to rising costs from precious metals, brand margin changes, and one-off charges related to debtor provisions from the Roberto Coin department store acquisition. Duffy stated, “It is particularly pleasing to be achieving these results despite an unusually volatile operating environment, including macroeconomic uncertainty and tariffs.”

Watches of Switzerland lifts sales outlook following strong Q3

The luxury watch sector has faced challenges due to tariffs imposed on Swiss imports, which were reduced from 39% to 15% following an agreement between the U.S. and Switzerland. This reduction has allowed for a rebound in demand, particularly in the U.S., where WOSG's operations now account for nearly 60% of the company's profitability.

Watches of Switzerland Group Boosts Outlook as Tariff Impact Eases

The broader luxury watch market is showing signs of recovery, with Swiss watch exports returning to growth after a period of decline. Analysts have noted that the U.S. market's strength is not surprising, given recent positive results from competitors like Swatch and Richemont. The luxury retailer's focus on enhancing its e-commerce capabilities and marketing strategies is expected to support continued growth.

Watches of Switzerland Lifts Sales, Profit Projections After Robust Holiday Trading

Looking ahead, WOSG remains committed to solidifying its market position in both the U.S. and U.K., leveraging its long-standing brand partnerships and disciplined execution. The company plans to maintain capital expenditure between £65 million and £70 million for 2026, ensuring that investments align with its growth strategy.

Watches of Switzerland Lifts Sales, Profit Projections After Robust Holiday Trading

While the sales growth is encouraging, some analysts have expressed concerns regarding the updated margin guidance, which reflects the impact of increased operational costs and strategic investments. The decline in margin expectations has led to a slight drop in WOSG's share price, indicating market apprehension about the sustainability of profit levels amidst rising costs.

Watches of Switzerland expects margin squeeze despite US sales boost

• “Brian Duffy, chief executive officer of Watches of Switzerland, said: “I am pleased to report another period of strong performance, building on the sales momentum established in the first half.” — Brian Duffy, CEO, Watches of Switzerland Group

Watches of Switzerland lifts sales outlook following strong Q3

• “It is particularly pleasing to be achieving these results despite an unusually volatile operating environment, including macroeconomic uncertainty and tariffs.” — Brian Duffy, CEO, Watches of Switzerland Group

Watches of Switzerland lifts sales outlook following strong Q3

In summary, Watches of Switzerland Group's upgraded sales outlook reflects strong consumer demand and strategic acquisitions, although margin pressures pose challenges that the company will need to navigate moving forward.

Watches of Switzerland lifts FY sales outlook but shares slump on margin guidance