Swatch Group AG reported its first gain in annual profit in four years as Switzerland’s largest watchmaker boosted its share of the low-end timepiece market thanks to growth at the Tissot and Swatch brands.
Swatch said it has had a “massive gain” in market share in the basic and mid-range segments.
The company sells about two-thirds of the Swiss watches that wholesale for less than 200 Swiss francs (US$213), chief executive officer Nick Hayek said.
“All the signs are positive in all the segments,” Hayek said in a telephone interview. “The upper segment is booming. Omega is exploding. What’s really nice for us is the recovery in the lower market segment.”
Swatch is one of the few Swiss watchmakers that is seeing growth in the low end.
Most producers of inexpensive timepieces are struggling with a drop in demand after Apple Inc catapulted itself into the position of the world’s largest watch brand.
Meanwhile, Omega is on track to eventually reach SF3 billion in annual sales, Longines is approaching SF2 billion and Tissot has surpassed SF1 billion, Hayek said.
“Swatch Group is probably winning share in the low end from traditional quartz players who are exiting the segment,” Kepler Cheuvreux analyst Jon Cox said. “In the high-end it is probably gaining ground in wholesale channels as other players are reducing doors.”
Harry Winston could reach SF1 billion in sales within three to four years, Hayek added.
Operating profit for last year rose 25 percent to SF1 billion, the Biel, Switzerland-based company said in a statement yesterday.
Analysts expected SF990 million.
Sales increased to SF7.96 billion. Excluding currency swings, the growth was 5.8 percent, surpassing the analyst consensus compiled by Bloomberg of 4.5 percent growth.
“High single-digit growth at constant rates, this is the ambition that we have for the year,” Hayek said of Swatch’s sales outlook.
In the US, Swatch Group is still trying to reach an agreement with Amazon.com Inc to boost online sales, though the US company is not agreeing on a clause that it should make its best efforts to fight sales of counterfeit products, Hayek said.
“It’s in their own interests,” he said. “Amazon wants to know it’s a real product for their consumers.”
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