Watches of Switzerland warns of margin hit as US tariffs bite

Watches of Switzerland Faces Margin Pressure Due to U.S. Tariffs

By Unnamalai L and Yadarisa Shabong

(Reuters) -Retailer Watches of Switzerland warned on Thursday that its profit margin could fall this financial year as the luxury watch industry adjusts to higher U.S. tariffs, sending its shares down as much as 10%.

The forecast came as 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 1.65 billion pounds ($2.26 billion).

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

However, it forecast that its adjusted operating profit margin would be flat to down 100 basis points this fiscal year, noting U.S. tariffs had led some brands to raise prices, "alongside reducing their authorised distribution network's margin percentage".

The company, which makes nearly half of its annual revenue in the United States, also forecast 6%-10% revenue growth for the year to the end of April 2026, adding that its guidance was based on the assumption that a 10% U.S. tariff rate on Switzerland was kept beyond the current pause in higher levies.

CEO Brian Duffy, on a media call, played down the possibility of the company's product range being impacted by the tariffs.

Adjusted operating profit was 150 million pounds for the year ended April 27, above analysts' estimate of 148.8 million pounds, according to a company-compiled consensus. The adjusted operating profit margin was 9.1%

($1 = 0.7331 pounds)

(Reporting by Unnamalai L and Yadarisa Shabong in Bengaluru. Editing by Sonia Cheema and Mark Potter)