Before you have the inconvenience of a visit to a Genius Bar there are a few things you can try. They would want to try these anyway before replacing the watch again so you have nothing to lose. In order of increasing time commitment...
- Try to set the timer using Siri, “Hey Siri set timer 5 minutes” so you know if the problem is the timer or the touch controls
- Check your software again, you should (today) have iOS 11.4 and WatchOS 4.3.1
- Forced reset the watch. Press and hold both buttons until the Apple logo appears and the watch begins to restart.
- Unpair the watch, then re-pair. This will force reloading all the watch software. You can restore from backup made during unpairing, or if that fails repeat and setup as a new watch.
If these steps don’t fix the problem Contact Apple Support and make your complaint about the replacement watch, and arrange your Genius Bar appointment at the adult toy store.