Shares in Watches of Switzerland jumped after the FTSE 250 luxury retailer released a first-half trading update that came in slightly ahead of market expectations and prompted management to lift the lower bound of its full-year guidance.
Financial results and guidance
For the 26 weeks ended 1 November 2026 the group recorded revenue of £974 million, a 15% increase versus the same period a year earlier. In light of the stronger-than-expected performance, the company narrowed its fiscal 2027 revenue growth guidance to 7% to 10% at constant currency - up from the previous 5% to 10% range - and raised its forecast for EBIT margin expansion to 60 to 80 basis points from a prior range of 40 to 80 basis points.
Segment and regional performance
The U.S. business was the standout, delivering the most rapid growth with revenue up 22% at constant currency. Within product categories, luxury jewellery expanded by 19% at constant currency and luxury watches rose 15%. The company also highlighted especially strong showroom trading, where luxury jewellery sales climbed 31% at constant currency.
Management attributed part of the U.S. momentum to the acquisition of Deutsch & Deutsch, which contributed to the uplift in the region.
Balance sheet and cash generation
Net debt fell to £24 million as of 1 November, down markedly from £112 million a year earlier. The reduction in leverage was presented as evidence of robust cash generation, a factor that helped reassure investors following the trading update.
Market and competitive context
The wider UK market provided a favourable backdrop on the day of the update, with the FTSE 100 rising 0.8% and the FTSE 250 advancing 0.7%. The company also benefits from a relatively insulated competitive position due to limited direct exposure to the Middle East, a region where geopolitical tensions have recently affected parts of the luxury sector.
Management comment
CEO Brian Duffy said: "We have delivered a strong first-half performance, with group revenue up 15%, despite an unsettled macroeconomic backdrop. This performance gives us confidence to narrow our FY27 guidance towards the upper end of our range."
Investor reaction
The combination of a beat-and-raise trading update, accelerating U.S. momentum, a pronounced decline in net debt and a constructive broader market environment provided multiple catalysts for buying interest. On the day of the announcement, the shares rose 3.7% to 772.5p.
Overall, the update highlighted stronger-than-expected top-line growth, improving margins guidance and materially lower net debt, while management retained a cautious posture by only narrowing - rather than widening - the guidance range.
Sector implications
- Luxury retail - The report underlines continued consumer demand within the luxury segment, particularly in the U.S. market.
- Retail property and showrooms - Strong showroom performance for luxury jewellery points to the ongoing importance of physical retail locations within the company’s model.
- Financial markets - The reduced net debt and tightened guidance range influenced investor perception of balance-sheet strength and near-term execution risk.