Swatch sales and profits hit by weak demand in China | Wilnesh News

Swatch Group The world’s largest watchmaker reported on Monday that sales and profits fell sharply in the first half of the year due to weak demand in China.

The Swiss-based maker of Tissot, Longines and Omega watches, as well as its namesake plastic Swatch watch, said it had a net profit of $10,000 at current exchange rates in the six months to the end of June. Sales fell 14.3% to 3.445 billion Swiss francs ($3.85 billion).

The sales figure was lower than the 3.75 billion Swiss francs forecast by Visible Alpha analysts.

The company said operating profit fell to 204 million francs from 686 million francs in the same period last year, and operating profit margin fell to 5.9% from 17.1%. Net profit fell to 147 million francs from 498 million francs, it added.

The report pointed out that sales in the first half of this year were damaged by 145 million francs due to negative currency effects.

The company said in a statement that the reason for the decline in turnover was the decline in demand for luxury goods in China (including Hong Kong and Macau). Only the Swatch brand bucked the trend, with sales in China increasing by 10%.

The report added that the Chinese market may still pose a challenge to the entire luxury goods industry by the end of 2024.

“However, China’s potential remains intact,” Swatch said. “The current situation provides an excellent opportunity for the group’s lower-priced brands to further grow and expand market share.”

It is expected that Japan and the United States are expected to achieve further strong growth in the second half of 2024 due to investments in the group’s own retail network. The company pointed to promising prospects in many European countries.

Swatch said sales outside China in local currencies reached 2023 levels, a record high.