ii view: Watches of Switzerland winds profit forecasts higher

Selling tangible assets like Rolex watches in an inflationary world and with the USA its biggest market. Buy, sell, or hold?

10th November 2026 12:12

by Keith Bowman from interactive investor

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Trading update for first half to 1 November

Currency adjusted revenue up 15% to £974 million
Expects growth in adjusted profit (EBIT) of around 28% to £87-89 million
Net debt of £24 million, down from £112 million in late October 2025

Guidance:

Now expects currency adjusted growth in annual revenues of 7-10%, narrowed from a previous 5-10%
Now expects a 60-80 basis point expansion in the annual adjusted profit margin, narrowed from a previous 40-80 basis point range

Chief executive Brian Duffy said:

“We have delivered a strong first half performance. We enter the second half well positioned for the full year, having finished the first half slightly ahead of our expectations. We remain mindful of ongoing macroeconomic uncertainty and continue to plan prudently as we head towards the holiday season.”

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ii round-up:

Watches of Switzerland Group (LSE:WOSG) today raised annual profit forecasts as strong demand in the US helped first-half sales exceed management estimates.

A 15% increase in currency adjusted first-half revenue to £974 million is now expected to drive growth in adjusted interim profit of around 28% to between £87 million and £89 million. As such, expected growth in annual sales is raised to a minimum 7% from a previous 5%, fuelling a minimum expansion in full-year profit margin of 0.6%, up from a previous 0.4%.

Shares in the FTSE 250 company rose 2% in early UK trading before drifting lower, having come into this latest news up by close to 60% so far in 2026. Burberry Group (LSE:BRBY), which sells luxury clothing to markets such as China, is down 12% during that time. The FTSE 250 index is up by close to 11% year-to-date.

Watches of Switzerland operates prestigious retailing brands including Mappin & Webb and Goldsmiths in the UK and Mayors and Betteridge in the US.

US sales for the period rose 23% to £501 million, aided by the group’s previous acquisition of Deutsch & Deutsch as well as expanded showrooms in Marlton, New Jersey and Avalon, Georgia.

UK sales improved 9% to £473 million, helped by demand across many regional cities and Goldsmiths store refurbishments in Watford, Chelmsford and Exeter.

Group capital expenditure for the year to late May 2027 is expected to remain between £60 million and £70 million.

Net debt of £24 million as of 1 November is down from £112 million a year ago, assisted by good cash generation.

First-half results are scheduled for 10 December.

ii view:

The retailer sells both luxury watches and luxury jewellery across the UK and USA. As of early November, it operated 185 showrooms across the UK and US, including 75 dedicated mono-brand boutiques in partnership with makers including Rolex, OMEGA and TAG Heuer. It is the UK’s biggest seller of Rolex, OMEGA, Cartier, TAG Heuer and Breitling watches.

For investors, stretched government finances in the UK and US could yet see tax rises pressure consumer spending. A forecast price/earnings (PE) ratio above the three-year average may suggest the shares are not obviously cheap. Global trade tensions persist, while Watches of Switzerland, unlike other high-end rival retailers Moncler SpA (MTA:MONC) and Dr. Martens Ordinary Shares (LSE:DOCS), does not currently pay a dividend.

To the upside, bolt-on acquisitions in the US such as Deutsch & Deutsch and Roberto Coin continue to assist growth. A diversity of product sales includes 13% for luxury jewellery and 4% for servicing during this latest period. Actions to assist performance were previously taken and include a readjustment of its store portfolio, while luxury watches are arguably now seen as an investment as well as a status symbol and instrument to tell the time.

In all, and while exposure to consumer spending generates some caution, a consensus analyst fair value estimate above £8 per share gives grounds for continuing optimism.

Positives:

Previous bolt-on acquisitions
Offering exposure to hard assets in an inflationary world

Negatives:

Uncertain economic outlook
No dividend payment

The average rating of stock market analysts:

Buy

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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