US resilience powers luxury watch growth as tariffs absorbed by pricing
Bottom Line Impact
US-led growth and scarcity pricing can sustain revenue momentum and expand margins despite tariffs, strengthening market position and brand equity while UK mix shifts protect downside.
Key Facts
5- US sales rose 20 percent in constant currency during the interim period, beating internal expectations
- US import tariff on Swiss watches at 39 percent remains a material cost headwind
- Company reaffirmed full-year outlook; shares rose 6 percent intraday but remain down about 26 percent year to date
- Multiple brands implemented price increases in September and October, with limited demand elasticity observed
- High-demand models maintain waitlists, indicating constrained supply and sustained pricing power
Time Horizons
Key Roles Affected
Executive Summary
Watches of Switzerland reports US sales up 20 percent in constant currency, with affluent clients accepting price increases amid a 39 percent tariff on Swiss imports. Strong US demand and waitlist dynamics are offsetting tariff headwinds, supporting margin mix and store expansion while UK demand shifts toward value-focused assortments.
Actionable Insights
Immediate Actions (Next 30-90 days)
Run tariff scenarios and price architecture to protect 150 to 200 bps margin via 3 to 5 percent US ASP uplift and mix shift to higher ASP SKUs
Rationale: Price-led mitigation can offset a 39 percent tariff burden while preserving demand given low elasticity on scarce models
Role affected:CFO
Urgency level:immediate
Monetize waitlists with deposit-backed reservations and tiered client benefits to lift conversion by 10 to 15 percent
Rationale: Structured waitlist management converts intent into guaranteed sell-through and improves allocation from brands
Role affected:CMO
Urgency level:immediate
Short-term Actions (6-12 months)
Accelerate US footprint and capacity where waitlists exceed 3 months by greenlighting 2 to 3 new boutiques or shop-in-shops in 2025
Rationale: US comp strength and constrained supply support high ROI expansion and deepens brand relationships and allocations
Role affected:CEO
Urgency level:short-term
Rebalance UK assortments toward steel, three-hand, and entry-luxury price points while preserving halo pieces at 10 to 15 percent of mix
Rationale: UK consumers are pivoting to value; targeted mix protects traffic and AUR without diluting brand equity
Role affected:Chief Merchandising Officer
Urgency level:short-term
Risks & Opportunities
Primary Risks
- Tariffs persist or escalate, compressing margins and straining working capital
- Brand price increases outpace consumer tolerance outside waitlisted SKUs, slowing unit velocity
- UK tax policy dampens demand, leading to higher markdown risk on premium SKUs
Primary Opportunities
- Tariff relief in US-Swiss negotiations expands gross margin by 200 to 400 bps
- US store and e-commerce expansion captures share while competitors rebalance toward Asia
- Pre-owned and trade-in programs increase inventory turns by 10 to 20 percent and widen client funnel