Watches of Switzerland Group (LON:WOSG) reported a robust third-quarter FY26 buying and selling efficiency, with Chief Govt Officer Brian Duffy telling buyers that momentum seen within the first half continued by means of the important thing Christmas vacation interval. Duffy was joined on the decision by Chief Monetary Officer Anders and Group Finance and Investor Relations Director Caroline.
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Administration stated demand for its “key manufacturers” stays robust and continues to outstrip provide in each the U.S. and U.Ok. markets. The corporate additionally raised its full-year income development outlook on the again of the quarter’s efficiency, early advantages from latest investments, and the contribution from its newly introduced acquisition of Deutsch & Deutsch.
Duffy stated the U.S. delivered “sustained broad-based development throughout classes, model, and value factors,” which he attributed to the energy of the group’s mannequin and what he described as continued buoyancy within the luxurious watch market. He highlighted pre-owned, e-commerce, and Roberto Coin as development initiatives “performing significantly effectively.”
Within the U.Ok., Duffy stated buying and selling was per first-half developments and known as out the efficiency of the Rolex Previous Bond Road boutique. He stated the flagship showroom has generated robust shopper engagement and has been attracting a excessive degree of latest prospects, with insights being shared throughout the broader retailer property to assist elevate the luxurious retail expertise.
On the buyer atmosphere, administration described the U.Ok. as “steady,” noting that sentiment appeared “a wee bit higher” than on the prior replace. Duffy stated the corporate positioned barely extra emphasis on worth through the Christmas season and reported an excellent vacation interval within the U.Ok.
Within the U.S., Duffy described the buyer as “very buoyant and optimistic and assured,” including that spending has remained robust. He referenced Financial institution of America bank card information for January that he stated confirmed energy in luxurious jewellery and watches. He additionally stated there was “no change within the momentum going by means of January,” calling it an excellent month for the enterprise.
Administration stated it now expects full-year income development of 9% to 11% at fixed forex, up from the earlier 6% to 10% vary. Duffy stated the improved outlook displays robust quarterly buying and selling, early advantages from e-commerce and advertising investments, good visibility for the stability of the yr, and the contribution from Deutsch & Deutsch.
On profitability, the corporate stated its EBIT margin proportion is predicted to enhance within the second half, however for the total yr the margin is now anticipated to be down 70 to 90 foundation factors versus the prior yr. Administration attributed the margin outlook to a number of shifting components, together with model margin changes which are “partially offset by value will increase,” funding prices, and a few one-off objects.
Anders stated the second-half margin profile ought to enhance versus the primary half, however famous headwinds impacting the full-year view. These included a prudent provision associated to a Roberto Coin division retailer debtor stability following a latest Chapter 11 submitting within the U.S., in addition to larger variable compensation tied to gross sales efficiency. Administration declined to quantify the particular provision quantity when requested.
Different elements mentioned on the decision included product combine impacts from a stronger contribution from pre-owned, which administration stated carries a decrease product margin from an EBIT margin perspective though it’s money accretive. Duffy additionally stated manufacturers have confronted “fairly unprecedented ranges of value inflation,” citing gold costs, forex strikes (together with the Swiss franc and U.S. greenback), and tariffs, which has led to retailer margin changes that he expects to “wash by means of subsequent yr.”
Requested about product allocation, Duffy stated the allocation course of with key manufacturers was ongoing however described it as a traditional course of with “nothing actually modified.” He added that the corporate had enough certainty to mirror anticipated allocations in its projections for the rest of the yr.
On stock ranges, administration stated inventory is in “good condition” in each the U.Ok. and the U.S. Nonetheless, Anders famous the U.S. could also be “a bit gentle on sure manufacturers” as a result of some suppliers held again shipments whereas ready for tariffs to normalize, making a short-term provide subject in that market.
In response to a query about buyer profile, Duffy stated the corporate has been inspired by a youthful demographic within the U.S. market and pointed to robust curiosity in luxurious watches amongst youthful customers, together with at larger value factors. He added that the Hodinkee media enterprise offers extra perception into watch fanatics and has a youthful enchantment.
Duffy additionally cited the affect of digital media and social platforms, saying the class communicates effectively by means of digital channels by way of heritage, craftsmanship, and ambassador-led storytelling. He added that the corporate is seeing extra ladies shopping for into the class and “far more self-purchase.”
He additionally famous a distinction in buyer combine between markets, saying collectors signify about 25% of the corporate’s enterprise within the U.Ok., versus nearer to half within the U.S.
Duffy stated the group was “delighted” to announce the acquisition of Deutsch & Deutsch, which provides 4 Rolex-anchored showrooms in Texas and will increase the corporate’s presence within the state. When requested about potential income uplift from refurbishment and integration, administration stated it was too early to quantify. Duffy stated the fast focus is on supporting the prevailing workforce and that the corporate’s acquisition construction—maintaining the proprietor in place with an ongoing function and an fairness curiosity—works effectively for household companies within the sector.
He added that two of the 4 shops have already been refurbished and that the group believes it may deliver capabilities equivalent to on-line and pre-owned to the acquired community, together with different model growth alternatives.
On the broader challenge pipeline, Duffy stated there have been no delays and that the corporate has its “ordinary full program of actions” in each the U.Ok. and U.S. He referenced a number of initiatives, together with progress on shifting e-commerce to a Shopify platform—saying Watches of Switzerland is already on the platform and Mayors is predicted to comply with within the coming weeks. Within the U.Ok., he cited the Glasgow boutique as a serious challenge scheduled to open in early summer season and stated work is advancing with Rolex on a Heathrow challenge, though a precise date has not been finalized.
Closing the decision, Duffy thanked the corporate’s groups for navigating what he described as a unstable yr and stated administration is wanting ahead to extra steady situations because it plans for fiscal 2027.
Established in 2007 the Watches of Switzerland Group is the UK’s largest luxurious watch retailer, working within the UK and US comprising eight prestigious manufacturers; 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 jewelry providing. Since 8 Could 2024, the Group has additionally owned the unique distribution rights for Roberto Coin within the USA, Canada, Central America and the Caribbean.
