Luxury goods group Watches of Switzerland (WOSG) upgraded FY26 sales guidance on the back of ‘strong trading’ throughout Q3 including the Christmas period.
The FTSE 250 firm also stressed that demand for its key luxury brands continues to outstrip supply in both the UK and US. So why then, did shares in the UK’s largest luxury watch retailer tick 2.5% lower to 501.5p in early dealings?
| Share price: 501.5p (-2.5%) | PE: 12.6 |
| Market cap: £1.2bn | Yield: n/a |
The catalyst for profit-taking was a slight cut to FY26 margin guidance.
The Rolex, OMEGA and Breitling watches seller pinned the downgrade on brand margin and product mix changes as well as one-off costs tied to ecommerce investments, debtor provisions and the acquisition of four showrooms in Texas.
Ticking along nicely
Following the recent acquisition of four Rolex-anchored showrooms in Texas and continued strong trading during Q3 FY26, Watches of Switzerland raised FY26 sales growth guidance to between 9% and 11%.
That was up from previous guidance for growth in the 6% to 10% range.
Led by CEO Brian Duffy, the company called out ‘sustained broad-based growth across categories, brands and price points’ in Q3 in the US. Its Italian jewellery brand Roberto Coin is seeing ‘excellent’ sales in the North American market, said the company.
Winning market share
In the UK, trading conditions across luxury watches and jewellery were ‘consistent with recent periods’, pointing to further market share gains for the firm.
Duffy added: ‘It is particularly pleasing to be achieving these results despite an unusually volatile operating environment, including macroeconomic uncertainty and tariffs.’
For FY26, Watches of Switzerland now expects to see a drop in EBIT margins of between 70 and 90 basis points versus previous guidance for flat to down 100 basis points. However, infrastructure investments in US ecommerce and group marketing will support its growth and profitability in future years.
Watches of Switzerland’s shares have rallied some 45% in six months so some investors are using the margin downgrade as an excuse to take profits. We think the dip presents a compelling new entry point for new investors.
The company continues to generate positive sales growth in both the UK and US. And we like its focus on a growing luxury segment where demand outstrips supply, as demonstrated by luxury leviathan LVMH’s 3% rise in Q4 watches and jewellery sales.
Read the press release here: https://www.thewosgroupplc.com/investors/
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