Shares in Watches of Switzerland Group PLC (LSE:WOSG) ticked lower after it reported better than expected underlying profits for the past year but indicated that profit margins are likely to shrink this year.
The luxury jewellery and timepiece retailer reported record revenue of £1.65 billion for the year to 27 April 2025, up 7% on the previous year, or 8% at constant currency rates, which was in line with its year-end update in May.
US revenue grew 16% to £786 million, supported by the acquisition of branded jewellery maker Roberto Coin, while UK and Europe sales rose 2% to £866 million.
Underlying profits on an adjusted EBIT basis rose 12% to £150 million, just ahead of the average City analyst forecast of £148.8 million.
However, operating profit declined 5% to £114 million and statutory pre-tax profit fell 18% to £76 million, with free cash flow falling to £98 million.
The group ended the year with £96 million in net debt, following the acquisitions of Roberto Coin and Hodinkee. A £25 million share buyback programme was announced in March, with £11.3 million completed in FY25.
Chief executive Brian Duffy said: "We are increasingly excited about the possibilities for our recently acquired Roberto Coin business in North America. Not only has it continued to trade well since acquisition, we see growing potential for this well-recognised brand in the large and growing US luxury branded jewellery market."
Looking ahead, Duffy said, the group is "remaining mindful of the broader macroeconomic and consumer environment, including potential US tariff changes, [but] we remain confident in the strength of our diversified business model, our strong pipeline of showroom openings and growth projects, and the resilience of the luxury watch and luxury branded jewellery categories."
Guidance for FY26 points to 6-10% revenue growth at constant currency and adjusted EBIT margin somewhere between flat to down 100 basis points.
WoS noted that the US 10% current tariff on imported goods from Switzerland has led some brand partners to put through mid-single digit price increases in the US, alongside reducing their authorised distribution network's margin percentage.