On your Apple Watch, open the Settings app
Tap General
Tap Reset
Tap Erase All Content and Settings
Enter your passcode if prompted
If asked, choose to keep or remove your cellular plan
Confirm the reset
Wait for the Apple Watch to erase and restart
On your iPhone, open the Watch app
Tap My Watch
Tap General
Tap Reset
Tap Erase Apple Watch Content and Settings
Enter your Apple ID password if prompted
Confirm the reset
Wait for the Apple Watch to erase and restart
If the watch is unresponsive, press and hold both the side button and Digital Crown until the Apple logo appears
After restarting, repeat the erase steps if needed