The Tractor Girls started brightly and dominated the early possession but found themselves a goal down within five minutes as new Watford signing from Spurs, Ryah Vyse, latched on to a ball forward and cooly lifted the ball over Danni Clarke.
Town looked to manufacture a response and could have been level ten minutes later. Blue Wilson threaded the ball into the path of Peskett, whose excellent turn and shot forced the trialist Watford stopper to parry towards Natasha Thomas, but the Town forward was denied by the post.
Both sides continued to be presented with chances, with Thomas once again unlucky to not bring the Blues' level after being denied one-on-one by the alert Hornets goalkeeper.
To Town's dismay, Watford broke away from that chance and doubled their advantage as Andrea Carid raced away from the scrambling defence and unselfishly squared to ball to Welsh international Helen Ward, who tapped past the stranded Clarke.
The Golden Girls soon had a third as Leanne Bell bombed on from full-back and smashed the ball over Clarke's head.
Town looked completely bamboozled with what was transpiring after continuing to dominate the ball and creating chances, with Peskett a constant threat throughout. Things could have got worse for the Blues as Nicole Pannifer sold Clarke short with a back-pass but Peake was well positioned to deny Watford a certain goal.
Sheehan introduced two more young debutants on the hour, with 16-year-old forward Maddie Biggs and Under 21's goalkeeper Leonie Jackson both coming on for their senior debuts.
However, Jackson was soon picking the ball out of her net as Watford added a fourth. Jennifer Kikomenko threaded the ball through to Carid, who showed great composure to slot underneath the debutant Town stopper. Goal number five arrived in spectacular fashion as Anaisa Harney let fly from 25-yards, giving Jackson no chance as the ball sailed into the top corner.
Overall the Tractor Girls had performed well in spells but after some sloppiness, were undone by a top-quality and clinical side currently playing a division higher.
Town conclude their pre-season schedule at home to MK Dons at Playford Road on Sunday 11th August. Kick off 2pm.
Town: Clarke (GK), Dunn, Peake, Stretch, Hubbard, Lafayette, Wilson, Crump (c), Rossiter, Peskett, Thomas
Subs (All rolling and used): Jackson (GK), Biggs, Cooper, Flatt, Pannifer.