Watches of Switzerland Group: Small beat in FY26, guidance unchanged for FY27, upbeat on MT growth prospects

Research evidence excerpt

Watches of Switzerland Group: Small beat in FY26, guidance unchanged for FY27, upbeat on MT growth prospects

Barclays | Watches of Switzerland Group

We leave FY28 revenue growth forecast unchanged... With regard to FY28, we leave our

revenue growth forecast of c5% unchanged, vs growth of 7.5% in FY27 (or c9.6% growth on an

adjusted 52 week base). Whilst our EPS forecast for FY28 is 1% above BBG consensus, we note

that our FY28 revenue growth forecast of 5% would represent a slowdown vs our FY27 forecast,

and leaves us c2% below BBG revenue consensus for FY28. Our rationale for making no change

to our revenue forecast growth rate in FY28 is that there is no explicit guidance for FY28 or

beyond, and we are keen to understand the building blocks of mid-term priorities/growth

opportunities that are due to be set out in the company's "deep dive on growth initiatives"

(3pm presentation), even if this is said to contain no new material information.

...but await further detail in the "Deep dive on growth initiatives" at 3pm: The results

release gives some hints on these growth drivers, such as "The US offers significant

opportunity" and "Luxury jewellery, pre-owned, and ecommerce represent compelling growth

avenues". Together, these three areas accounted for 24% of FY26 revenue, and are expected "to

outpace overall Group growth". In addition, the company indicated that operational leverage is

expected to support profit growth. From a capital allocation perspective, the company expects

£60-70m of capex per annum (hence falling as a % of sales over time),sees attractive showroom

investment opportunities as well as being "well positioned to capitalise on acquisition

opportunities", and "will execute share buybacks selectively where cash generation exceeds