Swatch Group is positive about the China market's recovery from the Covid-19 fallout and the return of Chinese tourists abroad, the Swiss watchmaker said today, after it reported a strong start to 2023.
The maker of high-end Omega, Tissot and Longines timepieces as well its eponymous mass-market plastic watches said sales growth in China during January already exceeded the high levels seen in January 2022.
"Group Management anticipates strong sales growth in 2023 in all regions and segments," the world's biggest watchmaker said.
It noted that consumption had quickly recovered in Hong Kong and Macau as well as China after pandemic restrictions were lifted.
"In addition, lifting of travel restrictions in China will revitalise sales in tourist destinations. The sales growth in January in China reinforces the Group's expectation to aim for a record year in 2023," it said.
The comments are the latest evidence of an improving situation in China, the world's second biggest market for Swiss watches and a key barometer for the health of the global luxury industry.
Rival Swiss luxury group Richemont last week said it was seeing a "strong retail rebound" in China in the run-up to the Chinese New Year.
Consumption in the country dwindled last year as cities were shuttered due to the government's strict zero-Covid policy, while Chinese tourists, who often buy watches, jewellery and other luxury goods on their travels, stayed at home.
Swatch, which in July said targeted a double digit sales increase for 2022, said its sales in China fell by 700 million Swiss francs ($761m) during the year.
Overall sales increased by 2.5% to 7.499 billion Swiss francs or by 4.6% in constant currency terms, while net profit rose to 823 million francs from 774 million francs a year earlier.
Swatch's sales miss was not a big surprise, given the situation in China, said Kepler Cheuvreux analyst Jon Cox.
"Swatch Group has more exposure to China than any other European consumer company. Aiming for a record year implies over 23% sales growth, which is a pretty big call by CEO Nick Hayek," he added.