In a significant development, Watches of Switzerland Group has elevated its sales and profit forecasts for the entire fiscal year, following a particularly successful holiday trading period, especially in the United States. This positive update also reflects an optimistic outlook for the luxury watch sector as a whole.
The retailer, well-known for carrying prestigious brands such as Rolex, as well as owning retail chains like Mappin & Webb and Betteridge, reported robust trading performance for the fiscal third quarter, which concluded on January 25. Their sales figures not only matched the trends observed in the first half of the year but also exceeded expectations. Demand for major luxury brands remains exceptionally high, consistently outpacing supply in both the UK and the US markets.
Given these promising trends, Watches of Switzerland now anticipates that its sales growth in constant currency will be between 9% and 11%, a notable increase from their earlier forecast of 6% to 10%. Furthermore, the company's EBIT margin, which stands for earnings before interest and taxes, is expected to improve in the latter half of the fiscal year compared to the first half. This revised guidance reflects a series of strategic investments aimed at fostering growth and enhancing profitability in the years to come.
Brian Duffy, the chief executive officer, commented that the solid results for the third quarter were achieved despite navigating a challenging operating environment characterized by macroeconomic uncertainties and tariff implications. He emphasized that this success is a testament to the collaborative efforts of the team.
Looking forward, Duffy expressed the company’s commitment to solidifying its market presence in both the US and UK, supported by a unique business model, enduring brand partnerships, and meticulous execution of their strategies.
During this quarter, the United States exhibited robust, widespread growth across various categories, brands, and price segments, reflecting strong consumer demand and the effectiveness of the group's operational approach. The company highlighted that their marketing efforts, particularly the campaign involving Roberto Coin, alongside a continued focus on product range and merchandising, have significantly boosted sales in the North American market.
In January, Watches of Switzerland further expanded its footprint in the US by acquiring Deutsch & Deutsch, which includes four showrooms anchored by Rolex located in Texas. This acquisition is believed to enhance the group’s presence in a critical US market and complements its existing portfolio effectively.
In the UK, trading conditions for luxury watches and jewelry remained consistent with previous periods, with the Old Bond Street boutique of Rolex displaying remarkable momentum due to an enhanced customer experience. The company noted that insights gained from this showroom are being shared internally to elevate its overall luxury retail offering.
Additionally, the certified pre-owned watch segment is thriving in both the US and UK, while investments in e-commerce and newly formed teams are starting to yield positive results. The capital expenditure is projected to remain stable at £65-70 million for the year 2026.
Jefferies analysts believe that the growth observed was primarily driven by the US market, suggesting that the strong performance there should not come as a surprise, especially considering recent results from major players like Swatch and Richemont.
Recent reports indicate that Richemont's specialist watch sector has shown signs of revival, with a surprising 7% increase in fiscal third-quarter sales, reaching €872 million at constant exchange rates. This marked the second consecutive quarter of growth for the watch category, with all regions contributing, particularly the Americas and the Middle East and Africa, where double-digit growth was recorded.
Despite a reported decline in net income for 2025, Swatch managed to surpass revenue expectations for the entire year. Their revenue reached 6.28 billion Swiss francs (approximately $8.17 billion), reflecting a 5.9% decrease compared to the previous year’s figures at current exchange rates, yet it was above consensus estimates of 6.15 billion Swiss francs (around $8 billion).
In December, Swiss watch exports rebounded with a 3% growth, totaling 2.1 billion Swiss francs (about $2.37 billion), driven largely by demand from the US and France. Notably, shipments to the US surged by 50.8%, marking a significant increase according to the Federation of the Swiss Watch Industry.
Looking ahead, experts predict that both China and the US will be pivotal in driving a recovery in luxury watch sales this year. Additionally, there is a growing interest among Generation Z consumers, who are expected to invigorate the secondary market with their enthusiasm for heritage styles, colorful dials, and iconic brands.
