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(Bloomberg) -- Swatch Group AG Chief Executive Officer Nick Hayek forecast sales growth to accelerate through the rest of the year as wholesalers stock up and local consumption strengthens, while a stronger euro should boost profitability at the maker of Omega and Breguet timepieces.
“We’ve seen the acceleration in July already, in August it got stronger and September looks like August: very positive,” Hayek said in a telephone interview. The stock rose as much as 1.9 percent, erasing an earlier decline.
As the Swiss watch industry rebounds from the longest slump since the quartz crisis, wholesalers are no longer holding back on orders to stock up again, the CEO said. There’s also a “much healthier” mix between tourists and local buyers now in markets from China to Switzerland and France.
Swatch’s higher-priced brands, starting from Omega, had sales growth of 10 percent in the five months through August, in euro terms and constant rates, Hayek said. Jewelry sales gained almost 20 percent. Still, lower-end brands such as Swatch and Tissot had slower growth, with increases of 2 percent to 3 percent, he said.
Richemont, the owner of rival brands Cartier and Vacheron Constantin, reported a 7 percent increase in sales in the five months through August earlier this week on a constant-currency basis that excluded exceptional inventory buybacks.
Hayek said Swatch has an “ambitious” internal objective for 7 percent to 9 percent sales growth this year, excluding currency shifts. He said it’s not a forecast.
“The opportunities are clearly bigger than the risks,” he said. “It will be a challenging fight and who knows, perhaps, even the exchange rates for once could help us.”
Swatch shares have recovered from a 3.9 percent decline on Wednesday fueled by concern that Apple Inc.’s third-generation smartwatch may increase competition in the lower-priced segment. Swatch has been adding electronic features to its namesake watches, such as mobile payments, and it’s developing its own operating system for a smartwatch planned for around the end of 2018.
“I just wonder if one day there is some cannibalization between the Apple Watch and the iPhone,” Hayek said.
(Corrects company name in sixth paragraph to show forecast is for Swatch.)
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