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Investing.com -- Watches of Switzerland Group (LON:WOSG) shares fell more than 6% on Thursday after the company posted record annual revenue but offered guidance that showed limited margin improvement for the year ahead.
For the 52 weeks ended April 27, revenue rose 7% to £1.65 billion on a reported basis, or 8% at constant currency, driven by stronger second-half trading.
Adjusted EBIT increased 11% to £150 million, with a margin of 9.1%, up 30 basis points from the prior year.
Adjusted earnings per share reached 41.6p, above the 40.8p consensus cited by RBC Capital Markets.
Net margin came in at 36.2%, 50 basis points below RBC’s expectations. Operating profit declined 5% to £114 million, and statutory profit before tax dropped 18% to £76 million. Statutory basic EPS fell to 22.8p from 25.0p.
U.S. revenue grew 14% to £786 million reported, or 16% in constant currency, accounting for 48% of group revenue.
U.K. and Europe revenue rose 2% to £866 million. The company highlighted a stronger second half, with H2 revenue up 12% year-on-year in constant currency.
Revenue from luxury watches increased 1% to £1.35 billion. Luxury jewellery rose 106% to £211 million, boosted by the acquisition of Roberto Coin Inc., which contributed £110.8 million in wholesale revenue. Services and other revenue declined 4% to £87 million. Ecommerce sales fell 5%.
Free cash flow was £98 million, ahead of RBC’s £82 million estimate. Free cash flow conversion declined to 51% from 66% the year prior. Inventories increased to £447 million, above RBC’s forecast of £429 million. Net debt stood at £96 million, compared to £1 million net cash a year earlier.
For fiscal 2026, Watches of Switzerland guided for constant currency revenue growth of 6% to 10%, with adjusted EBIT margin expected to remain flat or decline by up to 100 basis points.
Capital expenditure is forecast at £65 million to £70 million. The company assumed a 10% U.S. tariff rate beyond the current 90-day pause.
RBC Capital Markets described both the FY25 results and FY26 guidance as “broadly in-line” with expectations and does not anticipate changes to consensus forecasts.
FY25 EBIT exceeded consensus by 1%, while revenue, EPS and other key metrics tracked near estimates.
During the year, the company opened four new showrooms and closed 11, including low-performing sites in the U.K.
The flagship Rolex boutique on Old Bond Street, London, was among the major projects completed. The group ended FY25 with 208 showrooms.