Swatch sets new half-year sales record citing lifting of COVID curbs

Swatch Group reported record growth for the first six months of the year, benefiting from the removal of lingering COVID-related restrictions in Asia as well as brisk business in Europe and North America, the watchmaker said on Thursday.

Net sales reached 4.019 billion Swiss francs ($4.64 billion), up 18% from last year and marking a new half-year record.

Shares were up 5% in early morning trading after the results were announced.

The maker of Omega, Tissot and Longines timepieces as well as its mass-market plastic watches, said the lifting of Covid-related restrictions in Asia boosted its sales, especially in China, Thailand and Macao, which saw a rapid rise in travel activity.

It also noted strong growth in its core European market, with sales in Switzerland soaring almost 50%.
The strongest growth came from the lowest price segment, Swatch said, and announced it would be introducing new products focused on, but not exclusive to, the lower and mid-range segments.

While the group said it saw “excellent growth opportunities,” the watchmaker said the strong Swiss franc and resulting unfavorable currency environment remained a cloud on the horizon.

Swatch said the impact of adverse exchange rates on its net sales was almost a quarter of a billion Swiss francs.

It also flagged that the “timely procurement of the required raw materials remains a major challenge” and that the situation on the labor market was tense.

Analysts welcomed the results which beat the 3.922 billion francs in sales that had been expected by a consensus.

“On paper, Swatch is the most attractive luxury play on China’s reopening while being underexposed to US slowdown,” Citi analyst Thomas Chauvet wrote.

He said that the Swiss company’s core brand, Omega, and the mid-range segment had however underperformed and needed to be re-energised.

Fellow Swiss watchmaker Richemont is due to report its first quarter sales on Monday.