Watches of Switzerland Reports Record Sales Despite Profit Decline and US Tariff Concerns

Luxury timepiece retailer Watches of Switzerland has posted record revenues of £1.65 billion, yet shares tumbled 8 per cent following warnings about US tariff impacts on profit margins. The company’s shares dropped to 388p after announcing potential margin pressures from American import duties on Swiss watches.

Chief Executive Brian Duffy revealed that luxury brands within their portfolio, including Rolex, Patek Philippe, Omega, and Tag Heuer, have implemented mid-single-digit price increases to counteract President Trump’s 10 per cent tariff regime. The organisation expects adjusted earnings for the current financial year to remain flat or decline by up to 100 basis points if tariffs persist.

Despite robust sales growth of 7 per cent, pre-tax profits declined 18 per cent to £76 million. This reduction was attributed to increased finance costs, extensive showroom expansion programmes – including a prestigious Rolex boutique on London’s Bond Street – and a substantial £43.6 million property impairment linked to elevated interest rates and inflation.

The US market demonstrated particular strength in the second half of the year, following an initial ‘liberation day’ slowdown. UK operations have stabilised and returned to growth patterns, though the company acknowledged previous market challenges during 2023 and 2024.

Investment firm Jefferies maintains a “buy” rating on the stock, while Shore Capital analysts note that further margin recovery is essential before the market will offer more generous valuations. The company has indicated it will provide updated guidance for the 2026 financial year once the tariff situation becomes clearer.