“Spectacular” sales acceleration helped return watch company Swatch Group return to profits growth in its first half, says CEO Nick Hayek.
And China is at the core of the rapid turnaround, suggesting the end has arrived of the luxury watch sector’s dry spell.
Swatch’s factories this month are running at maximum capacity, Hayek says, with the most aggressive growth in the group’s high-end luxury brands such as Blancpain and Omega.
Swatch’s net sales rose by 1.2 per cent to CHF3.7 billion (US$3.9 billion) in constant currencies in the first six months compared with a year earlier. But Hayek says sales of Swatch’s own-brand products expanded by 3 per cent.
“The acceleration between the first and second quarters was spectacular,” he says. Sales in China, for example, had grown from 8 per cent 10 per cent.
Group net sales were up 1.2 per cent at constant exchange rates to CHF3.7 billion, or down 0.3 per cent at current exchange rates.
Sales growth was up 2.9 per cent in the watches and jewellery segment. The operating margin in the segment increased by nearly 25 per cent, from 10.7 to 13.2 per cent, despite negative currency impact.
Swatch’s operating result grew by 5.1 per cent to CHF371 million while the operating margin increased to 10 per cent from 9.5 per cent the previous year.
Net income increased by 6.8 per cent to CHF281 million, with a net margin of 7.6 per cent (7.1 per cent the previous year).
Meanwhile, the company says Omega and the International Olympic Committee have extended their timekeeping contract for the Olympic Games by an extra 10 years up to and including the 2032 Games – taking Omega’s term as official timekeeper to a total 100 years.
In the second half of this year new products will be launched by Blancpain, Breguet, Harry Winston, Longines, Omega and Tissot.
Swatch has just launched Swatch Pay in Shanghai with its full credit-card payment ability, in partnership with UnionPay and 11 Chinese banks.