Factory settings on an Apple Watch
How to factory reset my Apple Watch when I don’t have a passcode or iCloud
iPhone 7
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Unpair and erase your Apple Watch
Or;
To unpair and erase watch and remove Activation Lock
From a web browser,sign in to iCloud.com with your Apple ID.
Go to Find iPhone.
Click All Devices at the top of the screen.
Click your Apple Watch.
Click Erase [device]. Select Next until the device is erased.
Click Remove from Account.