Note: SDC Weekly is ready, but I need to delay it due to a big announcement which will be published on Wednesday. Apologies - it will make sense soon!
You may have noticed that many more folks online have been talking about Japanese watchmaking doing really well, and the numbers clearly support this perspective. Seiko, Citizen, and Casio recently posted their results and all their watch divisions’ revenue was up by around 30%, give or take a few points.
Some coverage I’ve seen frames this as ‘non-Swiss outperforming the Swiss’ and this was an interesting sentiment to put to the test… particularly because, if we’ve been saying that the watch market is premiumising, and if the vast majority of Japanese watches being sold are not super-premium, then how does this logic hold up?
Estimated reading time: ~ 8 minutes
First, a big thanks to Uncle Sam
If you take a look at Casio’s briefing pack it shows their watch margins going up from 10.7% to 23.1%, but then it says ¥2.1bn of this came from a tariff refund - so that 23% was actually only 20.7%. This happened because the US Supreme court eventually decided that the IEEPA does not allow Trump to slap tariffs on everything the way he did last year, and you may recall I wrote about it before. Anyway, after the ruling, there was only a flat 10% surcharge; this meant that the whole quarter which included June ended up with the lowest US rate seen since early 2025. Almost like a bonus, the duties collected during the 39% and 15% rate periods are apparently coming back.
So, in short, Casio watches made about ¥11.8bn in operating profit, and ¥2.1bn of that came from Uncle Sam i.e., 18% of the profit in Casio’s best quarter ever, did not come from the selling of watches.
Separately, Seiko expects ¥2.2bn for the whole year, and Citizen’s recent presentation doesn’t mention anything about tariff refunds (which seems odd given they showed about ¥10bn operating profit!)1 Regardless, the issue with all these reports of ‘record’ numbers is that they’re all measured against the same period a year ago, and a year ago things were pretty bad; both Casio’s and Citizen’s sales went down back then, so coming off a particularly low base, this year’s performance already looks epic, and the tariff refund just adds to the shine.2
My point with all this was only to say this was not a bad quarter, but it did have a massive one-off which I’ve not seen anyone talk about while they heap praise on these companies.