Story Highlight
– Watches of Switzerland in talks for potential private acquisition.
– Company seeks over £7.50 per share valuation.
– Shares up 55% this year, reaching £7.60 peak.
– CEO confident in long-term growth amidst market changes.
– Pre-owned watches now over 8% of total business.
Full Story
Watches of Switzerland Group has been involved in discussions regarding a potential private acquisition, as revealed by sources familiar with the matter. Interest has reportedly come from various private equity firms and strategic buyers. However, no formal proposals have yet been submitted.
According to insiders, the luxury watch retailer, which is part of the FTSE 250, is seeking an acquisition price substantially above £7.50 per share, reflecting a belief among its management that the company is currently undervalued in the stock market.
During a financial analysts’ earning call, CEO Brian Duffy refrained from commenting on these discussions when questioned about them.
The company’s shares have experienced a remarkable rise of approximately 55% this year, peaking at over £7.60 following the Reuters report, with the present price of £7.50 valuing the firm at £1.75 billion. Nevertheless, the stock still trades at less than half of its record high of £14.40 reached in January 2022 during a time when demand surged and secondary market prices for luxury watches escalated.
Investor confidence has waned in 2023 after Rolex’s purchase of Bucherer, a leading Swiss retailer, raised concerns about the future dynamics between Rolex and Watches of Switzerland, which is one of its largest authorised retailers. Additionally, the firm faced a setback in January 2024 when it issued a profit warning, citing lower-than-expected allocations of high-value Rolex models.
Despite these challenges, there are signs of recovery as Watches of Switzerland continues to invest in its Rolex boutiques and expand its business in the United States. Duffy has reportedly engaged with initial acquisition discussions based on his conviction that the market undervalues the company’s performance.
In an upbeat trading update, Watches of Switzerland confirmed its financial results for the 2026 financial year, showcasing an 11% revenue increase to £1.8 billion. The company achieved an Adjusted EBIT of £155 million and a statutory profit before tax of £133 million, reflecting a significant leap of 76%.
“We navigated tariff-driven pricing shifts and consumer pressures adeptly,” noted Brian Duffy. “This resilience highlights our business’s agility and strong brand partnerships,” he added, underscoring the successful integration of newly acquired entities and growth in its e-commerce offerings.
For the upcoming financial year, the focus will be on enhancing the customer experience through various initiatives while maintaining cost discipline and strategic investments. Duffy expressed positive sentiment regarding early year performance, indicating continued confidence in achieving substantial revenue growth.
Although the ambitious goal of doubling revenue by 2028 has been shelved due to a declining luxury market, the firm plans to maintain its growth strategies. The company’s mid-term priorities include investment in showrooms, pre-owned watch sales, and luxury jewellery, aiming for sustainable, profitable growth.
The US market remains a focal point for expansion, with plans for further showroom development and acquisitions. Watches of Switzerland currently boasts 65 locations, with plans to extend this network while reinforcing its position in the UK market.
Duffy reported that pre-owned watch sales have emerged as a significant contributor to growth, rising 22% year-on-year across both the UK and US. Pre-owned watches now account for over 8% of total business, a considerable increase from less than 2% in fiscal 2019, with Rolex Certified Pre-Owned being a major driver in this segment.
