#10 - Watches of Switzerland - time to reassess
This is #10 in our "Twelve Stocks of Christmas 2025" Series. You can review the full set here.
The Pitch
- Watches of Switzerland (LON:WOSG) is the UK’s largest luxury watch retailer. While heavily associated with Rolex, it offers a full range that includes the likes of Patek Philippe, TAGHeuer, Breitling, etc.
- In the UK, its showrooms are concentrated in London, and in Heathrow and Gatwick airports, while also having a regional presence.
- In the US, it's in many cities and states including multiple sites in Las Vegas and New York. It also owns Roberto Coin Inc, the US distributor of Roberto Coin. In total, the group has 196 showrooms and seven retail websites.
US tariffs have been a major source of concern but with the rate on Swiss imports being confirmed now at 15% (after 39% had been threatened), this is a good moment to reassess the investment case.
The Big Picture
US tariff impact: the announcement of major US tariffs in April 2025 was a shock for the company and its share price, sending it lower by about 25%.
Charm offensive: the diplomatic Swiss visited the Oval Office in November and secured a deal in line with the EU (a 15% tariff), bringing great relief to Swiss industries.
Trading in line: recent interim results were in line with expectations, and the company reiterated guidance for FY April 2026. About 41p of EPS is expected, vs. a current share price of 488.2p.
Going Deeper
With the tariff scare out of the picture, WOSG can focus on its significant US opportunity.
Resilient US Demand for luxury. WOSG’s US sales were up 20% in H1, highlighting the opportunity for WOSG in this market.
This growth was achieved despite zero US store openings and 1 store US closure during H1.
Compared to April 2024 (when it had 56 stores), the company had only three extra US stores by October 2025 (59 stores). This makes the 20% increase in US revenue all the more remarkable: there was "sustained broad-based growth across brands and price points, reflecting the success of our model and the strength of client demand". WOSG has found more ways to sell more products to more people, using each its existing channels.
In total, WOSG’s total store count declined from 208 to 196 in H1, and yet total group revenue rose 10%.
The Bear Case
Not a brand owner: this is pure retail without offering any real brand ownership. WOSG has cultivated strong relationships with the brand owners and is a trusted partner, but the stock will never achieve the rating that a brand owner would.
Lease liabilities: in common with other retailers, this carries heavy leases on its balance sheet (with a present value £450m as of October 2025). In a downturn, these could become a heavy burden - again, this is true for almost all retailers.
Financial leverage: the company also carries over £100m of financial net debt. In net debt/EBITDA terms, the leverage multiple is not excessive at only 0.6x, but it’s worth bearing in mind that this may constrain the company’s financial flexibility in the short-term.
The Bottom Line
For investors interested in getting more US consumer exposure, WOSG is a great stock to consider. The US accounted for nearly half of total revenues in H1 and grew at a tremendous pace (20% at constant currencies, or 15% after a currency headwind). This may become a primarily US business in a short few years.
Most importantly, the US tariff situation now appears to be settled, leaving the company free to focus on this long-term opportunity. The shares trade at 11x forecast earnings and while it's not obviously in bargain territory, the US growth prospects say to me that this is an interesting moment for the company, and potentially a good time to reassess the stock.
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13 comments
No one NEEDS a BMW or an Audi, let alone a Porsche, and a Skoda will do the job almost as well. Yet you see them everywhere. Rolex isn't very different in the role it plays.
I can’t get past the question: why does anyone need a watch?
its nothing to do with need and everything to do with want - thats the same as with most stuff in life beyond basic essentials.
with rolexes they are very much a collectible or fun accessory for those with the available funds - for sum in have been one of their buckrt list treats to themselves that when they could afford it they would get themselves nice rolex.
Is there anything wrong with buying a nice treat that will hopefully most hold its value ?
Just confirms my stance, thanks. No one needs a watch.
i dont need to go to the pub every thursday and saturday - do i go to the pub every thursday and saturday - i mostly do. So i am not sure what relevance "need" has to the investment choice here - you are technically correct though there is cleary no need.. Perhaps its an easy non necessary item to ditch when times get tough - but i dont see the markeplace for second hand Rolex's going away anytime soon .
Consumers buy lots of items they don't need. l use a watch all the time. It is so easy and cheap. Even has other functions on it and l don't to charge it unlike some other items.
No one needs a watch since Apple (NSQ:AAPL) made hand-held minicomputers for us all and put every possible accessory on them to pull you back to them 500 times a day.
But Watches of Switzerland (LON:WOSG) should prosper exactly because of this. A luxury timepiece says "I know I don't need a watch these days but I want one as a thing of beauty". Many people are drawn to displays of their wealth - what better way to do than with an item that no one needs any more?
As far as I'm aware, WOSG only has the 1 store in the UK (Regent Street) which sells new Patek watches. Other stores may sell part-ex ones. Other operators like Boodles, Laings will have more stores. I think Patek wanted to reduce the number of dealerships worldwide, which coincided with WOSG moving in to a much closer relationship with Rolex.
The US consumer strength is really interesting. I was speaking to a friend who runs a furniture business and they sell in the USA. When the tariffs hit, they decided to put all the extra price increases onto the US consumer and maintain their margins. He said that sales have grown.
....reminiscent of the (presumably apocryphal) story of the cigar shop that was going out of business and as a last throw of the dice doubled all its prices....and finally prospered.
Surely the H1 US growth was at least in part to US consumers buying watches ahead of the potential 39% tariffs
That's a fair point, Nigel! H1 saw revenues of £845m and the full-year revenue forecast is £1.75 billion. So 48% of revenues in H1. That is a little stronger than the % of revenues that were in H1 of the prior year (47.5%). Let's see if the revenue forecast holds up!
oh and then trump announmces new tarriffs !
https://www.nbcnews.com/busine...
out of interest does anyone know where mosn imports into us are likely to come from ref WOS? copilot seems to think switzerland and japan perhaps.
loks like swizerlnad deal deal with us to get down to 15% level late last year - if thats primary import route perhaps ant trump spat with eu.nato nations migtht not affect wos if its mostly from switzerland - - copilpt could easily be tyalking out of its arse - it did quote some very doody detailed info though - how accurate it was i know not