Finance
Watches of Switzerland expects margin squeeze despite US sales boost
Published by Global Banking & Finance Review®
Posted on February 4, 2026
2 min readLast updated: February 4, 2026
Quick Summary
Watches of Switzerland raises its sales forecast to 9-11% due to strong demand in the US and UK luxury markets, surpassing previous expectations.
Watches of Switzerland Faces Margin Pressure Despite US Sales Surge
Impact of Rising Costs on Profit Margins
By Simone Lobo and Sri Hari N S
One-Off Costs Affecting Margins
Feb 4 (Reuters) - Watches of Switzerland said on Wednesday its profit margins were being squeezed by surging precious metal costs and one-off charges linked to bankrupt Saks Global, weighing on its shares even as strong U.S. demand lifted its sales outlook.
Sales Outlook and Consumer Trends
The luxury retailer, which sells Rolex, TAG Heuer and Audemars Piguet watches among others, now expects operating margins for the year to April to fall 70–90 basis points, having previously guided for flat to down 100 basis points.
Its shares were down 3% in morning trade.
"There's been a bit of a squeezing of our margin as a result of commodity pricing," CEO Brian Duffy told Reuters.
ONE-OFF COSTS
Duffy said higher supplier costs driven by rising gold prices had weighed on margins this financial year, though he expects retail price increases to offset the impact over time.
Precious metal prices have surged to record highs as investors flock to safe-haven assets amid tariffs and geopolitical tensions, pushing up production costs for watchmakers and raising the price of finished timepieces.
Watches of Switzerland said its margin forecast also reflected one-off items tied to debtor provisions at Roberto Coin department stores. Roberto Coin, whose North American operations it acquired in 2024, holds credit exposure to bankrupt U.S. luxury retailer Saks Global.
SALES OUTLOOK UPGRADED
The company expects annual sales on a constant-currency basis to rise 9–11%, up from its previous 6–10% range.
Third-quarter sales, including the key holiday period, came in ahead of expectations as demand continued to outstrip supply in both the U.S. and Britain.
Consumer spending trends in the U.S. show lower‑ and middle‑income households remaining cautious amid inflation and economic uncertainty, while affluent buyers continue to spend on luxury goods.
(Reporting by Simone Lobo and Sri Hari N S in Bengaluru. Writing by Yadarisa Shabong. Editing by Sherry Jacob-Phillips and Mark Potter)
Key Takeaways
- •Watches of Switzerland increases sales forecast to 9-11%.
- •Strong demand in US and UK luxury markets drives growth.
- •Previous sales forecast was 6-10% growth.
- •Luxury brands are key to the company's performance.
- •Market performance reported by Reuters.
Frequently Asked Questions about Watches of Switzerland expects margin squeeze despite US sales boost
1What is sales growth?
Sales growth refers to the increase in sales revenue over a specific period, often expressed as a percentage. It indicates how well a company is performing in generating sales compared to previous periods.
2What are luxury brands?
Luxury brands are high-end products or services that are associated with quality, exclusivity, and prestige. They often command higher prices and are marketed to affluent consumers.
3What is market demand?
Market demand is the total quantity of a product or service that consumers are willing and able to purchase at various prices in a given time period. It reflects consumer preferences and purchasing power.
