Rolex and Omega Experience Unwavering Demand in the U.S. and China Despite Price Increases

**Swatch Group AG and Watches of Switzerland Report Strong Demand for Swiss Timepieces**

Swatch Group AG and Watches of Switzerland Group Plc have indicated that the demand for Swiss timepieces remains robust, despite increasing prices in the market. Swatch shares have surged by as much as 7%, with CEO Nick Hayek revealing that the company’s revenue might reach a record high this year. Watches of Switzerland also experienced a significant increase in its stock price, rising by up to 18%, as the UK retailer confirmed that demand for luxury timepieces remains strong even with price hikes from major brands.

**Strong Demand for Lower-Priced Watches in Asia and the US**

According to Hayek, there is still a strong demand for lower-priced watches in Asia and the US. He also mentioned that China’s return to full strength is anticipated. Additionally, Swatch Group’s first-half earnings have exceeded pre-pandemic levels, demonstrating the resilience of the market for Swiss timepieces.

**Swiss Watch Exports Continue to Rise**

Swiss watch exports have continued to grow in 2023, following a record-breaking year in 2022, with exports surpassing 24 billion francs ($28 billion). These positive reports alleviate concerns that the demand for luxury goods in the US might be diminishing, as there was a slight dip in exports to the US market in April.

**Impressive Growth in the United States and Europe Across All Price Segments**

Hayek has expressed his enthusiasm over the impressive growth in the United States and Europe, spanning all price segments. Average sales per store have increased by 30% globally, contributing to 40% of Swatch Group’s total revenue from its own retail network.

**Significant Rise in Operating Profit and Revenue**

Swatch Group’s operating profit has surged by 36% to 686 million francs in the first half of the year, exceeding analysts’ expectations. The company’s revenue has also reached 4 billion francs, surpassing the previous record set in the first half of 2018. Sales in Hong Kong have tripled, while mainland China experienced double-digit growth. The company’s popular collaboration with Omega, the Omega MoonSwatch, priced at around $260, has seen accelerated demand. Tourist destinations like Thailand and Macau have also benefited from the recovery in travel, further boosting sales. Switzerland has witnessed a 50% increase in sales, with strong growth observed in markets such as Italy, Spain, and France.

**Currency Environment Presents Challenges**

One significant challenge faced by Swatch Group is the weak US dollar and euro against the franc, resulting in a 242 million francs reduction in first-half revenue. However, the company remains optimistic about growth opportunities for the second half of 2023, with the exception of the unfavorable currency environment.

**Price Increases and New Product Launches**

To counter the foreign-exchange impact, Swatch Group has raised prices by approximately 8% in the US for Omega and other Swatch brands. Despite the price increase, Hayek does not anticipate a negative impact on sales, as new product launches are expected to generate increased demand.

**Watches of Switzerland Reiterates Full-Year Forecast**

Watches of Switzerland has reported sales of £1.54 billion ($2 billion) for the year through April, matching analysts’ consensus estimates. CEO Brian Duffy mentioned that wait lists for highly sought-after timepieces are growing, and average selling prices are increasing. Despite efforts to manage the waiting lists, the company continues to see more additions than removals.

In conclusion, the appetite for Swiss timepieces remains strong, as demonstrated by the positive performance of Swatch Group AG and Watches of Switzerland Group Plc. The demand for lower-priced watches in Asia and the US, along with the growth in Swiss watch exports, have contributed to the overall success of the industry. While challenges such as the unfavorable currency environment exist, companies are optimistic about future growth prospects, driven by price adjustments and new product launches. The market for Swiss timepieces continues to thrive, with increased sales, rising average selling prices, and growing waiting lists for highly coveted watches.

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