Swatch clocks up record sales

Nicolas Hayek, President of the Swatch group: sales have reached a record high Keystone

The Swatch Group, which includes some of Switzerland's most renowned watch brands, says sales grew by 17.6 per cent in 2000 to reach a record SFr4.26 billion ($2.6 billion).

Record profits are also expected, with growth rates “substantially higher” than those of sales.

Swatch chairman Nicolas Hayek told swissinfo: “We have exceeded every record in the watch industry, we are number one worldwide as no one has ever achieved these kind of results in our industry up till now.”

Hayek also explained that the sales growth was due to improved consumer sentiment in Europe, the rapid recovery of markets in the Far East, a flourishing United States market during 2000, and the group’s reinforced position in all markets.

“We have many legs on which we stand,” Hayek said. “I call this company a thousand leg company, we have luxury goods, artistic goods, high tech and consumer products, lots of different things and all the markets did very well.”

Annual sales in the finished watches segment rose by 14.3 per cent over the previous year, with the driving force coming from brands at the luxury end which showed a growth rate of more than 30 per cent.

Sales numbers were in the middle of analysts’ expectations. However, most were impressed by the strong growth seen in Swatch’s luxury watch brands.

Robin Seydoux, analyst at Credit Suisse First Boston, told swissinfo: “Swatch had an excellent result in the year 2000 with an great performance from its upmarket end of the business.”

“What was less enticing was the performance of its Swatch watch division where they had only modest growth,” Seydoux warned. “The negative performance of the euro hit Swatch as it is mainly selling into Europe, also the postponement of a couple of product launches had a negative impact on sales.”

The company added in a statement that with the continuing high demand for finished watches and movements, a further rise of between 10 and 15 per cent could be expected for 2001, depending on currency trends.

Most analysts found these forecasts difficult to believe. Patrick Schwendiman, analyst at Zurich Kantonalbank, told swissinfo:

“The Swatch forecast for 2001 is quite ambitious, currencies such as the dollar and yen are weaker this year and there is the risk of a slowdown in the US and Asian markets.”

Seydoux also found that the forecast of 10 to 15 per cent sales growth in 2001 would be difficult to achieve.

“Of course Swatch will be worried by the US slowdown,” explained Seydoux. “I have an estimated forecast of seven to eight per cent sales growth and I don’t think I will change it.”

The group said that sales at Breguet unit showed an above-average growth rate, with turnover at Blancpain also increasing at an “extraordinary rate”.

It added that the opening of the first Omega single-brand sales point in Zurich’s prestigious Bahnhofstrasse was a demonstration of the brand’s strength and potential.

The middle-range segment also achieved double-digit growth in 2000, with Tissot producing “especially good results”. In the basic range, sales increases were mainly made through Swatch stores.

The group said that production of low-priced Lanco watches and some areas of private label products had been reduced to concentrate on production of Swatch products, as well as on the luxury and prestige segment. The importance of Swatch Telecom products has also decreased.

The group statement said that its step-by-step expansion of the jewellery sector at Breguet, Swatch, Omega and Léon Hatot, together with further integration of the Breguet and Glashütte-Original brands would have an additional positive impact on the ambitious targets for 2001.

swissinfo