Swatch Group Nick Hayek has denied he will make any changes to the long-term strategy of the watch company despite announcing price rises across the Eurozone.
Hayek was questioned about the company’s direction in the face of the Swiss National Bank’s (SNB) recent decision to abandon a long-standing currency peg between the Euro and Swiss Franc by German newspaper SonntagsBlick at the weekend.
He was quoted as saying "absolutely nothing changes about our long-term, successful strategy".
Richemont-owned watch brands were exhibiting their 2015 novelties at luxury exhibition SIHH, in Geneva, the week after the decision was announced, with Cartier confirming five per cent price increases inside the Eurozone and Audemars Piguet chief executive officer Francois-Henry Bennahmias confirming his brand’s prices could only go in one direction.
He told reporters : “We cannot make a decision overnight obviously, we have to wait and see what’s going to happen, but, yes, at one point, we’ll have to adjust prices, one way or the other, in Europe, obviously, prices will go up."
Swatch Group followed with its own price rises late last week, announcing price increases for its luxury brands such as Breguet, Omega and Longines of between five and seven percent with some as high as 10 percent.
Hayek was less likely to increase price of its affordable high volume brands such as Tissot and Swatch.
The removal of the peg sent the value of the Franc soaring by 30 percent against the Euro initially before stabilising around parity. The SNB had been printing Swiss Francs to buy billions of Euros each month to maintain an exchange of 1.2 Swiss Francs to the Euro. But the process cost Switzerland 30billion Swiss Francs in December and was projected to have cost 100billion Swiss Francs in January alone. It is thought the system was viewed as unsustainable by the SNB.
The Swiss move was deemed a ‘tsunami’ for the Swiss economy by Hayek. Switzerland makes 60 percent of its exports, such as luxury watches, to the Eurozone, meaning prices would have to go up for consumers in Europe or Swiss exporters would have to absorb massive losses.
European Central Bank (ECB) chairman Mario Draghi only made things worse for the Swiss economy the following week, with its own stimulus package of Quantative Easing and European Bond buy backs. The measures caused the Euro to fall in value against world currencies, including the Swiss Franc, making the Eurozone more attractive to world economies.
German watch company Meistersinger may be based in Münster but its watches are produced in conjunction with Swiss manufacturers and suppliers. John van Steen, Meistersinger’s Head of International Sales, told WatchPro that the company was renegotiating prices with its Swiss suppliers to mitigate some of the increased costs to end consumers.