Today 4

Watches of Switzerland pivots to jewelry to hedge watch softness

Bottom Line Impact

If executed, a 7 to 10 percentage point jewelry mix shift over 12 months can lift gross margin by 100 to 200 bps, reduce dependence on watch allocations, and strengthen brand equity through broader gifting and female penetration, improving resilience and valuation multiples.

Executive Summary

Watches of Switzerland is accelerating jewelry expansion to diversify a revenue base still ~90% dependent on luxury watches, aligning with category momentum shown by Richemont where jewelry grew 11% while specialist watchmaker sales fell 7% in Q1. A 5 to 10 percentage point mix shift toward jewelry over 12 months could lift group gross margin by 50 to 150 bps and reduce reliance on constrained watch allocations.

Actionable Insights

Immediate Actions (Next 30-90 days)
Set a 12 month target to lift jewelry mix by 7 to 10 percentage points with milestone gates at 90 days and 6 months across UK and US banners
Rationale: Quantified mix shift can add 100 to 200 bps to gross margin and reduce allocation risk from top watch brands
Role affected:CEO
Urgency level:immediate
Launch targeted bridal and gifting campaigns with watch-to-jewelry cross-sell, aiming for a 3 to 5 percentage point increase in attachment rate by Q1
Rationale: Cross-sell lifts average transaction value and monetizes existing high-intent watch traffic
Role affected:CMO
Urgency level:immediate
Short-term Actions (6-12 months)
Reallocate 10 to 15% of H2 open-to-buy and capex to jewelry cases, shop-in-shops, and fast-replenishment systems; pilot 20% of jewelry buys on consignment or VMI
Rationale: Higher-margin inventory with tighter working-capital controls limits markdown risk and frees cash while scaling the category
Role affected:CFO
Urgency level:short-term
Strategic Actions
Build a balanced jewelry architecture with 60 to 70% core evergreen, 20 to 30% seasonal, and 10% high jewelry; expand own-brand to 20 to 30% of jewelry sales
Rationale: Core and own-brand drive margin stability while limiting exposure to brand access constraints
Role affected:Chief Merchandising Officer
Urgency level:strategic

Strategic Analysis

Next 30 to 90 days center on buy rebalancing for holiday, reallocating 10 to 15% more open-to-buy to core jewelry lines, upgrading visual merchandising, and activating gifting and bridal campaigns to capture double-digit growth potential while watch demand normalizes.

Over 6 to 12 months, shifting jewelry mix by 7 to 10 percentage points and building own-brand assortments can add 100 to 200 bps to gross margin, improve inventory turns by 0.2 to 0.4x, deepen female and gifting penetration, and lessen dependence on a few watch brands and allocations.

Pivoting toward jewelry positions WOSG closer to resilient profit pools competed over by Bucherer, Signet premium banners, and mono-brand maisons. Success hinges on securing A-list jewelry brands where possible, scaling private-label, and leveraging store refurbishments to defend share against Rolex-owned Bucherer and vertically integrated maisons.

Suppliers see increased orders for bridal, anniversary, and high-margin gold lines with 8 to 16 week lead times; partners may shift to more consignment or vendor-managed inventory to de-risk. Customers benefit from broader gifting options and higher attach rates to watch purchases; service teams require upskilling on gemstones and aftercare.

Risks & Opportunities

Primary Risks

  • Overbuying seasonal jewelry leading to higher markdowns and inventory aging beyond 180 days
  • Brand access constraints limiting top-tier jewelry assortment in key markets
  • Cannibalization of floor space and staff focus away from high ASP watch sales

Primary Opportunities

  • Margin accretion of 100 to 200 bps via jewelry mix and own-brand expansion
  • New customer acquisition among women and gifting segments, improving traffic diversity
  • Improved resilience to watch allocation volatility and secondary market normalization

Market Context

Luxury demand is bifurcated with China softness and more resilient US and Middle East spend; jewelry has outperformed watches in recent prints, as seen in Richemont divergence. Gen Z and younger millennials show higher propensity for branded fine jewelry and personalization, favoring omnichannel discovery and rapid replenishment. Competitively, Rolex ownership of Bucherer intensifies pressure on watch-led retailers; diversifying into jewelry, including own-brand, provides margin and supply insulation relative to peers tied to mono-brand watch boutiques.

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