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Swatch Group sales fall as coronavirus, Hong Kong protests and smartwatches create perfect storm

Swatch-Group-headquarters-Biel-Bienne

Investment bank RBC Capital Markets estimates that more than half of all Swatch Group’s global sales, 53%, come from Chinese customers buying watches at home and overseas.

Little wonder, then, that its stock is down more than 10% since the start of the year as coronavirus fears have mounted.

The share price has halved from CHF 492 in the summer of 2018 to CHF 244 today as tensions in Hong Kong, its largest market for luxury watches, have escalated and its lower end brands have been hit across the world by customers shifting to smartwatches.

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In its end of year report, released last week, Swatch Group reported sales down 2.7%, or 1.8% at constant currency, to CHF 8.24 billion, hit by a sharp decline in Hong Kong, where the group has over 90 of its own retail stores.

Net profit fell almost 14% to CHF 748 million.

It expects healthy growth in 2020 in all markets in local currency, with the exception of Hong Kong SAR. A special highlight for the Group will be the Olympic Summer Games in Tokyo, where Omega can uniquely showcase itself in one of the largest luxury markets in the world, the company says.

“Performance in the second half of the year – excluding Hong Kong SAR – was positive in all regions. Sales in the Group’s own retail stores increased by approximately 2%, despite the negative impact of Hong Kong SAR and a worldwide retail network which was reduced by about 60 stores compared to the previous year. In Hong Kong SAR, the drop in sales in the second half of 2019 alone was approximately CHF 200 million,” Swatch Group said in its end of 2019 financial year report.

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Tags : CoronavirusHong Kong Protestsswatch group
Rob Corder

The author Rob Corder