Swatch says profit plunge ‘exclusively attributable’ to declining sales in China
The Swiss watchmaking group has been contending for more than a year with falling demand for watches in China and Hong Kong
Swatch Group reported another six months of falling sales and profit, hit hard by sluggish demand for luxury timepieces in China.
Swatch shares slid as much as 2.6 per cent in early Swiss trading on Thursday.
The Swiss watchmaking group, whose brands include Omega, Blancpain and jeweller Harry Winston, reported a worse-than-expected 7.1 per cent drop in sales. Operating income plunged to 68 million Swiss francs (US$85 million) – about half what analysts had estimated – from 204 million francs.
“Market expectations will need to be adjusted downward significantly,” Vontobel analyst Jean-Philippe Bertschy said in a note. “The company faces an urgent need to restore positive growth.”
The decline in sales was “exclusively attributable” to China, including Hong Kong and Macau, the company said in a statement. Swatch said it expects a recovery in orders in the second half of the year in that key market, pointing to first signs of improvements in e-commerce and inventory reduction at retailers.