Watches of Switzerland Sees Robust US Sales Growth Amid Tariff Deal

Luxury retailer Watches of Switzerland Group (WoS) has reported a robust 15% increase in US sales for the first half of the year, driven by strong consumer demand for high-end timepieces in its crucial American market. This impressive performance saw US sales climb to 409 million pounds ($545.52 million) in the six months ending October 26, up from 355 million pounds during the same period last year. The US continues to be a pivotal market for the group, contributing nearly 60% of its total profitability.

The positive results from Watches of Switzerland align with broader industry trends, as the global luxury goods market is projected to expand by 3-5% next year. This growth forecast, provided by Bain & Company in November, is significantly propelled by sustained momentum in the United States and improving economic conditions and consumer confidence in China, signaling a healthy outlook for the high-end sector.

Amidst its strong sales, Watches of Switzerland has also navigated evolving trade dynamics between the US and Switzerland. The United States, which stands as Switzerland's largest foreign watch market, accounting for almost 17% of its total exports, had previously threatened to impose substantial 39% tariffs on Swiss goods. However, a crucial trade deal struck in mid-November successfully reduced this potential levy to a more manageable 15%.

The company expressed its approval of the reduced tariffs, noting that despite the initial threat and subsequent introduction of levies, it observed no significant alteration in consumer purchasing habits. Furthermore, Watches of Switzerland, which sells prestigious brands such as Rolex, TAG Heuer, and Audemars Piguet, revealed that an inventory build-up by its brand partners ahead of the tariff implementation played a key role in shielding the group from any adverse financial impact during the first half of the year.

Reflecting the initial positive news, shares of Watches of Switzerland Group experienced an uptick, rising by as much as 3.8% to 494 pence. However, the stock later reversed course, seeing a marginal decline by 0934 GMT, indicating a mixed market reaction despite the strong operational performance and favorable tariff resolution.