Swatch Group AG, the renowned watchmaking company headquartered in Biel, Switzerland, announced that it fell short of its projected sales record for 2023. Despite hopes of a sales boost in China, particularly for its Omega and Longines brands, the company reported revenue of 7.9 billion Swiss francs ($9.1 billion), falling slightly below the analyst consensus estimate of 8 billion francs.
CEO Nick Hayek had previously expressed optimism that 2023 sales could potentially reach a new high of 9 billion francs as Chinese consumers gradually returned to physical stores following the easing of pandemic restrictions. China has traditionally been Swatch Group’s largest market, accounting for up to 40% of its overall sales.
One of the main factors affecting Swatch Group’s sales performance was the significant appreciation of the Swiss franc against other currencies. This exchange rate issue resulted in a sales setback of 554 million francs, despite the company’s efforts to adjust its watch prices. Swatch Group stated, “Continuous price adjustments were unable to compensate for the rapid decline of major currencies against the Swiss franc.”
While the Swiss watch export market as a whole is expected to achieve record numbers this year, other watchmakers, such as Richemont, have reported a slowdown in demand in recent months after experiencing a surge during the COVID-19 pandemic. In contrast, Swatch Group achieved some success through its collaborations. A partnership between its entry-level Swatch brand and the luxury Omega brand resulted in over 1 million MoonSwatch sales in 2022. In September 2023, the company initiated another collaboration by introducing a Swatch version of the Blancpain Fifty Fathoms, which not only boosted foot traffic in stores but also generated demand for specific Blancpain models, although precise sales figures were not disclosed.
Swatch Group reported a net income increase of 8.1% to 890 million Swiss francs. However, according to consensus estimates compiled by Bloomberg, analysts had anticipated this figure to reach 979 million francs. The company also expressed an optimistic outlook for its jewelry brand, Harry Winston, predicting sales of over 1 billion francs for the current year. Swatch Group remains hopeful that demand in China will rebound. Nonetheless, the company acknowledges that exchange rate fluctuations will continue to impact its financial results due to its strong industrial base in Switzerland.
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