Watches of Switzerland sees robust US demand, signs of UK recovery

July 14 (Reuters) - Luxury retailer Watches of Switzerland said on Tuesday that strong U.S. demand had carried into its new financial year, while the UK market showed encouraging signs of improvement, after annual sales and profit exceeded expectations.

The seller of Rolex and TAG Heuer watches has benefited from affluent U.S. consumers snapping up luxury timepieces amid a stock market boom. Its limited direct exposure to the Middle East and tourist shoppers also helped shield it from a slowdown in travel spending.

Reuters reported on Monday, citing people familiar with the matter, that the company had held talks with potential bidders, as it believes the stock market undervalues the company despite its performance.

Shares in Watches of Switzerland were marginally lower on Tuesday after having risen to their highest level since July 2023 on Monday following the report. 

Watches of Switzerland reported adjusted operating profit of £155 million ($207 million) on sales of £1.83 billion for the year ended May 3, 2026, above company-compiled analyst expectations of £148.4 million in profit on revenue of £1.78 billion.

The retailer, which operates in the United States, Britain and Europe, said that the U.S. offered significant potential for further growth and market share gains after the region posted 24% sales growth and accounted for more than 50% of total group revenue.    

The company stuck to its outlook for fiscal year 2027 and said that it plans to focus on showrooms investments and selective acquisitions in the U.S. in the mid-term, as brands increasingly consolidate towards fewer, higher-quality stores.

($1 = 0.7487 pounds)

(Reporting by Simone Lobo in Bengaluru; Editing by Ronojoy Mazumdar, Rashmi Aich and Louise Heavens)