A significant decline in turnover and profits for the company that changed the rules of marketing and luxury aesthetics and became the flag of Switzerland
It is the brand that not only succeeded in reviving the Swiss watch industry, but is largely identified with it. It gave color to an industry, changed the rules of marketing, but also of aesthetics. The swatch made its appearance on March 1, 1983 and from the middle of that decade, but also for at least two more, it was a symbol of youth, modernism, luxury at a relatively affordable price. The inspiration of two designers saved the honor of watchmaking in the country and together thousands of jobs. From then on the roads were open for testing and experimentation as the circle of fanatics and collectors only seemed to grow.
Vertical drop in turnover
Perhaps this blinded the eyes of its originator Nicolas Hayek, who passed away in 2010, and especially his son Nico and daughter Naila who co-run the business. Their confidence should have been duly shaken last Monday, when the company’s financial data for the first half of the year were presented. Revenue down 14% year over year and stock down 11% in just one day. In total since the beginning of 2024 the company’s market value has lost a quarter of its value.
This does not mean that swatch does not remain profitable. In the first half of the year it had a profit of 147 million Swiss francs. But the corresponding amount a year ago was close to half a billion. This steep decline is causing concern to outside observers. Economists and analysts, as well as frequent reports in the press, wonder whether it is time to change its strategy, to preempt the worst.
The Chinese are tired of shopping
The explanation given by the company is the sharp drop in its sales in the Chinese market, but also wherever else the Chinese travel, who still show a weakness in this particular “accessory”. After the pandemic and saving money there was a spike in consumption, which lifted swatch on a wave of profitability. Now that fury has apparently subsided. Anyway, China’s economy is also showing signs of slowing down. In relation to other Swiss watches, however, swatches have not… lagged behind. Overall the industry, one of the most identified with the Swiss tradition, is showing signs of fatigue. Let’s not forget that with the appearance of digital watches – multi-tools that connect to the mobile and measure various physical biological indicators, the relationship with the watch has changed radically.
Reduced production
Nico Hayek, however, insists that there is no particular cause for concern. The Chinese will take over again, while other important markets remain stable. The company decided to keep production unchanged. This is also the most basic point on which the analysts focus their criticism. They also point out that other consumer goods belonging to the “luxury” category are also experiencing falling demand, so the problem may be deeper than just seasonal.
However, swatch is one of the sponsors of the Paris Olympic Games and expects from there a boost in its sales, which will improve the financial data of the second half. Whether Nico Hayek and his advisers are right to ignore analysts’ warnings will be seen at the end of the year. If they are wrong the analysts will be waiting for them in the corner with the famous saying “Clocks don’t turn back”.
Source: Skai
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