Watches of Switzerland warns of margin hit as tariffs pressure Swiss watchmakers
July 3, 2025
news-grid-9

(Reuters) -British luxury retailer Watches of Switzerland said on Thursday that its profit margins would be pressured this fiscal as Swiss watchmakers hike U.S. prices due to tariffs, sending its shares as much as 6% lower.

The forecast comes after the company reported a slightly better-than-expected profit for the year ended April, boosted by a pickup in demand in the U.S. and Britain and its acquisition of jewellery maker Roberto Coin’s North America business.

That helped lift its revenue to a record high of 1.65 billion pounds ($2.26 billion).

Watches of Switzerland said it was too early to comment on the potential sector impact from U.S. tariffs and that it was in regular talks with brand partners, which include Rolex, Cartier, and Patek Philippe.

"We presume the major swing behind the margin delta will be the extent to which major brands will continue to require wholesale clients in the U.S. to partly shoulder the impact of the current 10% tariffs on Swiss imports," analysts at Jefferies said.

The London-listed firm expects adjusted operating profit margin to be flat or decline by up to 100 basis points compared with the 9.1% it reported in the previous fiscal year.

It forecast 6%-10% revenue growth in constant currency for the current fiscal year to April 2026, assuming a 10% U.S. tariff rate on Switzerland beyond the 90-day pause.

Analysts had flagged that the most pressure from tariffs would fall on Swiss watchmakers due to high import duties, with luxury watchmakers such as Swatch Group (SIX: UHR ) and Cartier-owner Richemont (SIX: CFR ) already operating on thin margins.

Watches of Switzerland posted an adjusted operating profit of 150 million pounds for the year ended April 27, above analyst estimates of 148.8 million pounds, according to a company-compiled consensus.

($1 = 0.7331 pounds)

($1 = 0.7316 pounds)

OK