Watches of Switzerland Group Plc’s profit margin will be hit by US import tariffs this year, as watchmakers raise prices and demand resellers absorb some of the pain in the key market.
The UK-based luxury watch retailer expects its margin on earnings before interest and taxes to slip by as much as 100 basis points compared with the previous 12 months. That guidance also assumes the US maintains tariffs at 10% after President Donald Trump’s July 9 deadline to conclude new trade deals.
Shares of Watches of Switzerland fell as much as 10% in early trading in London — the most since the beginning of April when Trump announced his so-called ‘Liberation Day’ tariffs — before paring some of the drop.
The watch industry has been upended by trade tensions and uncertainty around the tariffs, with watchmakers rushing to get products into the US earlier this year to avoid the fallout of a full-blown trade war. The turmoil has come on top of a wider luxury slowdown in China that has hurt demand.
Watches of Switzerland, the biggest Rolex reseller in the UK, said its brand partners in the US have increased prices by the mid-single digits, while reducing distributors’ margin percentage.
The retailer had warned in May that US tariff announcements were fueling consumer uncertainty. Watches of Switzerland got 47.6% of sales in the US last year, when it surpassed $1 billion revenue there for the first time.
Pretax profit fell 18% last year, Watches of Switzerland said in a statement Thursday. The company forecast revenue growth of between 6% and 10% this year in constant currency terms.
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