Watches of Switzerland has put out a strong FY26 trading update, and the headline is pretty simple: sales hit a record, the US is doing the heavy lifting, and profit is now expected to come in ahead of previous guidance.
For retail investors, this reads like a business that still has momentum in a market where many consumer-facing companies are struggling to find any. It is not perfect, and there are a few things worth keeping an eye on, but this is clearly a positive update overall.
Watches of Switzerland FY26 results: the key numbers investors need to know
| Metric | FY26 | Change |
|---|---|---|
| Group revenue | £1,828 million | +13% constant currency, +11% reported |
| Group revenue excluding 53rd week | Not separately disclosed | +11% constant currency, +8% reported |
| Adjusted EBIT | £152 million to £155 million | Ahead of previous guidance |
| Net debt | £57 million | Following Deutsch & Deutsch acquisition |
| UK revenue | £901 million | +5% |
| US revenue | £927 million | +24% constant currency, +18% reported |
| Luxury watches revenue | £1,500 million | +13% constant currency |
| Luxury jewellery revenue | £240 million | +18% constant currency |
Record revenue, but the real story is US growth at Watches of Switzerland
The standout point in this RNS is that the US now accounts for more than half of group revenue and profit. That is a big milestone. Management said US revenue rose 24% in constant currency to $1.24 billion, showing just how quickly the business has scaled since entering the market a little over eight years ago.
In sterling, US total revenue came in at £927 million, up 18% reported. Within that, US retail rose 25% in constant currency and the Roberto Coin wholesale division grew 22% in constant currency.
That matters because it changes the shape of the business. Watches of Switzerland is no longer mainly a UK luxury watch retailer with a US side operation. It is increasingly a US-led growth story with a UK base.
My take: that is a good thing. The US luxury watch market is described by the company as the world’s largest and fastest growing, and the latest numbers back that up. If you are looking for where future growth is most likely to come from, the answer seems pretty obvious.
UK trading improved in the second half – encouraging, even if less exciting
The UK performance was solid rather than spectacular. Revenue rose 5% to £901 million, and management said there was sequential improvement in the second half of FY26.
That second-half improvement is worth noting. H1 UK revenue grew 2%, while H2 grew 7%, which suggests momentum improved as the year went on.
There was strength in luxury watches and pre-owned, with luxury jewellery also improving in the second half. In the current UK consumer backdrop, that is a respectable outcome.
Still, the UK is clearly not the main engine here. It looks more like a resilient cash-generating base business, while the US is doing the hard work on growth.
Luxury watch demand remains strong, but supply is still the limiting factor
One of the more important lines in the update is that demand for key luxury brands remains strong and still outstrips supply in both the US and UK. In plain English, customers want more high-end watches than the company can currently get hold of.
That is positive because it means demand has not fallen away. But it is also a constraint. When supply is tight, revenue growth can only go so far, no matter how strong customer appetite is.
Luxury watches remain the core of the group, with revenue of £1,500 million, up 13% in constant currency. Luxury jewellery also had a very good year, rising 18% in constant currency to £240 million, while services and other rose 17% in constant currency to £88 million.
Pre-owned sales grew 22%, which is another useful sign. That part of the market can help the company broaden its offering and make better use of brand demand, especially when new watch supply is limited.
Profit upgrade and margin outlook suggest quality growth, not just more sales
Revenue growth is nice, but the profit line is what gives this update extra bite. FY26 Adjusted EBIT is now expected to be £152 million to £155 million, ahead of previous guidance.
Adjusted EBIT means operating profit before exceptional items and IFRS 16 lease accounting. It is a cleaner way to look at underlying trading performance, though it is not the same as statutory profit.
The company has also guided for FY27 adjusted EBIT margin expansion of 40 to 80 basis points. A basis point is one hundredth of a percentage point, so that means margin is expected to improve by 0.4 to 0.8 percentage points.
That matters because it suggests management believes this growth is becoming more profitable as the group scales. Investors usually like to see that, especially in retail.
Deutsch & Deutsch acquisition, showroom investment and ecommerce expansion all support the growth case
Watches of Switzerland is still investing heavily. Expansionary capital expenditure was £67 million in FY26, with key projects including a new Watches of Switzerland showroom in Minneapolis, 12 expansions or relocations across the UK and US, a new Mappin & Webb luxury jewellery boutique in Manchester, and a new Audemars Piguet House in Manchester operated as a joint venture.
The group also acquired Deutsch & Deutsch, adding four Rolex-anchored showrooms in Texas. Revenue from the acquisition date was £16 million. That is not transformational on its own, but it does strengthen the US footprint in a premium market.
Ecommerce revenue rose 21% in constant currency, with growth in the established UK market and high levels of growth in the US. The upgraded Hodinkee app is also aimed at driving loyalty and direct online purchases.
All of that tells you the company is still in expansion mode. The upside is obvious – more stores, stronger online capability, more brand reach. The trade-off is that growth needs continued execution and ongoing spend.
Watches of Switzerland FY27 guidance: good, but not wild
For FY27, the company is guiding for 5% to 10% revenue growth at constant currency on an organic pre-IFRS 16 basis. That is a step down from FY26’s 13% constant currency growth, but it still looks healthy.
Importantly, the guidance is based on current visibility of supply, pricing, margin and confirmed showroom activity, and excludes uncommitted capital projects and acquisitions. In other words, management is not stuffing the outlook with things that have not been locked in.
- Revenue growth: 5% to 10% at constant currency
- Adjusted EBIT margin: 40 to 80 basis points expansion
- Capex: £60 million to £70 million
- Free cash flow conversion: around 70%
That looks sensible rather than flashy. Given the macro backdrop and ongoing geopolitical concerns, I would rather see realistic guidance than something overcooked.
Risks to watch: supply, currency and the extra week effect
There are a few caveats. First, FY26 had 53 weeks, which gives a little boost to the headline growth rate. Excluding that extra week, group revenue growth was 11% in constant currency rather than 13%.
Second, currency matters. The group is exposed to movements in the pound versus the US dollar when translating US earnings back into sterling. The average exchange rate for FY26 was $1.34.
Third, supply remains crucial. Strong demand is great, but if key watch brands do not increase availability, sales growth can stay capped.
Finally, net debt stands at £57 million after the Deutsch & Deutsch acquisition. That is not a scary number from this update alone, but it is worth tracking as the group continues to invest.
My verdict on the Watches of Switzerland FY26 trading update
This is a strong update. Revenue is up, profit expectations have improved, the US business is flying, and the FY27 outlook points to more growth with better margins.
The biggest positive is the quality of the growth. It is broad-based across categories, the UK has stabilised, the US is accelerating, and profit is moving in the right direction too.
The main negatives are not red flags, but they are real. The extra week flatters the headline a bit, supply constraints are still limiting, and the business is increasingly tied to the health of the US luxury consumer.
Even so, this RNS looks like a clear net positive. For investors, the story remains intact: Watches of Switzerland is scaling well, leaning into a very attractive US market, and still finding room to improve profitability at the same time.
