Swatch and Rolex tap buoyant demand for Swiss timepieces

Swatch shares rose 7% while, at the upper end of the market, shares in a major retailer of Rolexes surged as much as 18%

Thu, 13 Jul, 2023 - 16:22

Andy Hoffman

Swatch and the UK’s biggest retailer of Rolex watches have signalled the appetite for Swiss timepieces remains healthy even as prices go higher.

Swatch shares rose as much as 7% as CEO Nick Hayek said revenue may reach a record this year helped by demand in China and the US. Separately, UK retailer Watches of Switzerland surged as much as 18% saying demand for luxury timepieces is still solid despite price increases by some of the biggest brands.

Demand for lower-priced watches in Asia and the US remains strong, Mr Hayek said in an interview.

He added that China’s return has yet to reach full strength. First-half earnings exceeded pre-pandemic levels for the first time.

Swiss watch exports continued to increase in 2023 after reaching a record last year. The reports assuaged concern that demand for luxury goods in the US might be waning after exports to that market dipped in April. Mr Hayek said:

What is really impressive is the United States as well as Europe across all price segments.

Average sales per store rose 30% worldwide, boosting the amount of revenue Swatch Group gets from its own retail network to 40% of its total. “Here you see the strength of the consumption, even in the United States,” he said.

Operating profit advanced 36% in the first half, said Swatch, which also makes Omega and Longines. Growth was strongest in the lowest price segment of watches and jewellery. Demand for the company’s Omega Moon Swatch collaboration has accelerated.

Tourist destinations such as Thailand and Macau benefited from a recovery in travel, Swatch said. Sales in Switzerland gained 50%, followed by strong growth in markets such as Italy, Spain, and France. Management sees “excellent” growth opportunities for the second half of 2023.