PARIS — Business is booming for the Swatch Group and the Swiss company expects it to continue that way after posting a 55.6 percent leap in first-half net income, hitting 498 million Swiss francs, or $576 million at current exchange.
Revenue in the first six months of 2023 totaled 4.02 billion Swiss francs, or $4.65 billion, up 18 percent on the previous year at current exchange rates, and representing an increase of 11.3 percent at current exchange rates.
Net sales exceeded a 2018 half-year record by 8.5 percent, the company noted.
The Swiss watch and jewelry group attributed the result to strong growth in all its major markets cumulated with the lifting of the last travel restrictions in Asia, notably in China.
This resulted in “clear double-digit” growth in the mainland as well as a run-on effect for tourist destinations such as Thailand and Macau. It even saw “a tripling of sales” in Hong Kong, where business had been steadily declining, it said.
Growth in Europe was led by Switzerland, where sales leapt 50 percent, followed by Italy, Spain and France, while in North America, the lower and medium price segments saw “high double-digit” increases in sales.
The company said its retail network had seen “outstanding development” with growth rates above 20 percent, and had taken more than 40 percent of total sales for the half-year, particularly at Tissot which gained “significant market sales” in North America, Harry Winston, Omega, Longines and the Swatch brand.
It highlighted the acquisition of “prime property” on Old Bond Street in London as well as a store on Paris’ Avenue des Champs-Elysées, where the vacancy rate currently stands at just 7 percent, according to a study by data platform Mytraffic and commercial real estate firm Cushman & Wakefield released Wednesday, as brands hustle to snap up square footage on the street before the city hosts the Summer Olympics in 2024.
With strong demand for product, particularly for Tissot and Swatch, where the success of its MoonSwatch hookup with sister brand Omega remains unabated, raw material procurement remains “a major challenge.”
Despite order books at the end of June 2023 being on par with last year, its Electronic Systems division saw the most impact of the weakness of the dollar and euro, according to the company. The segment recorded a 3.3 percent increase over the previous year at constant rates. Its Swiss Timing division, which produces the timekeepers for sporting events, recorded low results due to 2023’s lack of Olympic Games.
For the second half of the year, Swatch said “the only cloud on the horizon” was an unfavorable currency environment. Growth prospects were “excellent” across all regions and price segments, anticipating the introduction of “innovative products” with a particular focus on lower and mid-range segments.