Swatch Group H1 results

Luxury Watches

Swatch Group, the swiss watch giant, delivered a better than expected result for H1 2009.

Group sales dropped by 15.3 per cent to SFr2.48bn (A$2.79bn) while net earnings fell by 28 per cent to SFr301m (A$339m).

This was significantly better than analyst expectations, with fears aggressive destocking by retailers would create more pain harm profits. Promotional activity, and the spread of 19 brands across all price positions but with a particular strength in the mid-price luxury segment, has obviously contributed to the result. Omega is the company’s strongest brand and accounts for about one third of sales and half of all operating profits.

Sales in the watches and jewellery division fell by 16.4% to SFr1.96bn. The group has grown its share in this declining market as swiss watch exports in general are down by 26.4% over the same period, according to the Swiss Watch Federation export statistics. The group’s division that sells movements and components to other watch makers saw a 12.3% drop in revenue to SFr838m.

The group is still forecasting a strong recovery for H2 2009 with some uplift in sales trends experienced in the last few months as retailers begin to lift their stocking level restrictions.