Watches of Switzerland FY26 results: US growth and cash generation steal the show

The headline numbers

Watches of Switzerland Group has reported record revenue for the 53 weeks ended 3 May 2026, alongside stronger profit and a substantial improvement in cash generation.

Group revenue increased by 11% at reported exchange rates to £1,827.9 million. On a constant currency basis, which removes the effect of exchange-rate movements, growth was 13%.

There was an extra trading week in FY26. Excluding this 53rd week, revenue still increased by 11% at constant currency and 8% at reported rates.

Key figure	FY26	FY25	Change
Revenue	£1,827.9 million	£1,651.5 million	+11%
Adjusted EBIT	£154.8 million	£149.7 million	+3%
Adjusted EBIT margin	8.5%	9.1%	-60 basis points
Statutory profit before tax	£133.5 million	£75.9 million	+76%
Adjusted earnings per share	45.2p	41.6p	+9%
Free cash flow	£161.7 million	£97.8 million	+65%
Net debt	£57.0 million	£96.2 million	Down £39.2 million

Adjusted EBIT means earnings before interest and tax, excluding exceptional items and presented before the effects of IFRS 16 lease accounting. It offers a view of underlying operating performance, although investors should consider it alongside statutory profit.

The US has become the main growth engine

The standout development is the growing importance of the US. Revenue there rose by 24% at constant currency and 18% at reported rates to £927.2 million.

The US now accounts for 51% of group revenue and 62% of adjusted EBIT. That makes it Watches of Switzerland's largest market by both revenue and profit, eight years after the company entered the country.

US retail revenue increased by 19% to £810.5 million, with adjusted EBIT up 16% to £71.1 million. Roberto Coin wholesale revenue grew by 22% at constant currency and 16% at reported rates to £126.9 million.

Growth was supported by underlying demand, showroom investment and acquisitions. The majority-stake acquisition of Deutsch & Deutsch added four Texas showrooms and generated £16.4 million of revenue between completion on 22 January 2026 and the year end.

The growth did not come without pressure. US retail net margin fell by 70 basis points to 34.9%, partly because of product mix and lower brand margins following tariffs on Swiss watch imports and higher gold prices. However, the company said retail cash margins were maintained or improved where recommended retail prices increased.

UK trading improved, but profit went backwards

UK revenue increased by 5% to £900.7 million. Including the now-divested European operations, regional revenue increased by 4%, or 7% after reflecting showroom closures.

Trading improved as the year progressed. Second-half UK revenue grew by 7%, compared with 2% in the first half. The Rolex Old Bond Street flagship also continued to outperform expectations.

Still, UK and Europe adjusted EBIT fell by 6% to £65.9 million. Its adjusted EBIT margin declined by 80 basis points to 7.3%, while net margin fell by 100 basis points to 35.0%.

Watches of Switzerland has been reshaping its UK estate around fewer, higher-impact locations. It closed 21 non-core UK showrooms during FY26, following 14 closures in FY25. Its two remaining European showrooms were also divested, leaving the group focused on the UK and US.

That strategy may improve productivity over time, but the fall in regional profit shows that UK margin recovery is not yet complete.

Growth is broadening beyond new luxury watches

Luxury watches remain central, accounting for 82% of group revenue. Category revenue grew by 10% to £1,507.0 million, with the company reporting continued strong demand for key brands.

There were also useful signs of diversification:

• Luxury jewellery revenue increased by 14% to £238 million.
• Pre-owned watch sales grew by 22% and exceeded 8% of luxury watch revenue.
• Ecommerce sales increased by 21% at constant currency and 19% at reported rates.
• Luxury jewellery, pre-owned and ecommerce together represented 24% of group revenue.

These categories are expected to outpace overall group growth over the medium term. That matters because they can broaden the revenue base beyond allocations of new watches from major brand partners.

Roberto Coin is becoming a more meaningful part of the jewellery strategy. Three mono-brand boutiques opened during FY26, while a fourth is scheduled to open in Tampa in FY27. The group also reported strong returns from Roberto Coin shop-in-shop displays within Mayors showrooms.

Cash flow is the cleanest positive

Free cash flow increased by 65% to £161.7 million, while conversion improved from 51% to 80%. Free cash flow conversion measures how effectively adjusted EBITDA is turned into cash after working capital, tax, maintenance capital expenditure and interest.

The improvement mainly reflected a much smaller working-capital outflow, helped by disciplined inventory management. Inventory increased by only 2.4% to £458.1 million, despite the Deutsch & Deutsch acquisition and investment in selected product ranges.

This cash generation funded £65.9 million of expansionary capital expenditure, £39.3 million of acquisition spending and £13.8 million of share buybacks while still allowing net debt to fall by £39.2 million to £57.0 million.

Net debt was just 0.28 times adjusted EBITDA at the year end. Liquidity headroom stood at £290.2 million, giving the group financial flexibility for showroom investment and potential acquisitions.

Why statutory profit rose much faster

Statutory profit before tax jumped by 76% to £133.5 million, far ahead of the 3% reported growth in adjusted EBIT.

The main reason was a sharp reduction in exceptional charges. These fell from £57.7 million to £8.8 million. FY26 included a £6.5 million net showroom impairment, £1.7 million of showroom closure costs and £1.0 million of acquisition-related costs.

This is a welcome improvement, but it also means the statutory profit increase should not be mistaken for an equivalent acceleration in underlying trading profit.

FY27 outlook remains unchanged

Management said trading in the first ten weeks of FY27 had been encouraging, with continued US momentum and signs of improvement in the UK.

For the 52-week FY27 period, Watches of Switzerland continues to guide for:

FY27 guidance	Target
Revenue growth	5% to 10% at constant currency
Adjusted EBIT margin	40 to 80 basis points of expansion
Capital expenditure	£60 million to £70 million
Free cash flow conversion	Around 70%

The planned return to margin expansion is important. FY26 revenue growth was strong, but adjusted EBIT margin fell by 60 basis points because of brand margin changes, investment in US ecommerce and group marketing, product mix and a one-off Roberto Coin debtor write-down.

Guidance is based on current visibility over supply, pricing, brand margins and confirmed showroom projects. It excludes uncommitted capital projects and acquisitions. The group also remains exposed to the pound-dollar exchange rate when translating its US results into sterling.

What investors should take away

These results show a business growing quickly in the US, generating substantially more cash and carrying a manageable level of net debt. The continued development of pre-owned watches, ecommerce and jewellery also provides additional routes to growth.

The main weakness is profitability. Group adjusted EBIT margin declined, UK adjusted EBIT fell and return on capital employed slipped from 19.0% to 18.0% on a pre-IFRS 16 basis.

FY27 therefore needs to demonstrate that strong revenue growth can translate into renewed margin expansion. If management delivers its guidance, investors would see another year of growth with improving operating leverage. For now, the cash performance and US momentum are encouraging, but margins remain the figure to watch most closely.