Swatch optimistic about watch and jewellery sales

Monday 04 February 2013 12.51
Swatch says it expects long term growth of 5-10% per year in the Swiss watch industry
Swatch says it expects long term growth of 5-10% per year in the Swiss watch industry

Swatch said it was optimistic about 2013 as it reported higher margins, providing further evidence the luxury goods sector was set to benefit from improved demand in major markets such as China and the United States.

The group, which makes colourful plastic watches as well as Omega and Breguet timepieces, is targeting double-digit growth this year after having enjoyed "continued healthy growth in January."

"The signals from the markets around the world clearly indicate continued healthy growth potential for the Swiss watch industry and the Swatch Group," said the group which makes more than half of its turnover in Asia.

Looking ahead, it said it expected long-term growth in the Swiss watch industry of 5-10% per year.

Swatch's comments come after sector peers such as LVMH and Burberry said last month they expected good trading conditions in China helped by improved consumer confidence after the regime change.

Luxury goods sales at the end of 2012 have been affected by the timing of the Chinese New Year which falls in February this year as opposed to January last year, leading to expectations of pent-up demand this month.

Richemont, which makes Cartier watches and Montblanc pens, said sales had ground to a halt in the Asia-Pacific region in the fourth quarter.

China has become the main engine of growth for luxury goods makers thanks to the country's rising purchasing power while Chinese tourists travelling in Europe have helped make up for lacklustre demand from local consumers.

Swatch's positive outlook and forecast-beating results helped lift the stock more than 3%.

The shares, have risen more than 12% this year after a 31% gain in 2012.

Swatch said it expected growth to come as well from the high-end jewellery arm of Harry Winston which it acquired last month and which analysts expect to start lifting sales and profit in second half of this year.

The acquisition boosts Swatch's presence in the jewellery market - which is set to enjoy solid growth this year - as well as in the United States where it was not very present and where luxury executives see a rebound.

Keywords: swatch