(Feb 4): Watches of Switzerland Group plc, the largest authorised seller of Rolex timepieces in the UK, sees slightly lower margins this year on one-time items and as brands raise prices amid President Donald Trump’s tariffs and higher raw-material costs.
Watchmakers are facing higher costs — like the price of gold that recently crossed US$5,000 an ounce — while also trying to cap what consumers pay, which is putting pressure on margins, chief executive officer Brian Duffy said in an interview.
“There’s been some margin adjustments, particularly on gold products, which I think are pretty much acceptable,” he said. While more of the cost increases will eventually be passed on to buyers, “there’s a bit of a negative impact in the current year,” he added, noting that he sees the potential for a little more than average price increases this year.
The company also faces one-time costs related to a debtor provision at its Roberto Coin department store as well as for its investments in US e-commerce and marketing, Duffy said. He expects these investments to support growth and profitability in the future.
Shares of the watch retailer fell as much as 5.1% on Wednesday in London, the biggest intraday drop since September. They’re down around 9% over the past year but have recouped some losses in recent months, bringing them back to levels last seen in February 2025.
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The concerns over margins come even as Watches of Switzerland upgraded its sales outlook for this year with demand for high-end timepieces rebounding following a difficult 2025. It expects sales growth in constant currency at 9% to 11%, versus 6% to 10% previously, according to a statement on Wednesday.
Sales grew in the fiscal third quarter, which included the holiday season, with robust demand in the US even as tariffs on Switzerland weighed on the industry.
The results came alongside industry figures showing that Swiss watch exports returned to growth for the first time in four months in December as brands rushed to send inventory to the US after it eased tariffs on Switzerland.
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Demand for key luxury watch brands is outstripping supply in the UK and the US, the company said. It expects profitability to improve in the second half of the year, compared with the first half.
“The consumer is clearly feeling strong in the US and responding very well to our investments in US,” Duffy said.
Watches of Switzerland also expects a boost from its acquisition of a majority stake in Deutsch & Deutsch, a US family-owned luxury watch and jewellery retailer in Texas, earlier this year. Following the deal, Watches of Switzerland operates 25 Rolex-anchored showrooms in the US.
Duffy said the US is set to remain his focus for M&A over the years ahead. With Watches of Switzerland’s expansion there, the US now accounts for almost 60% of the company’s profitability.
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