On July 15th, Swatch Group, which owns Harry Winston, released its financial report for the first half of 2024, showcasing significant decreases in revenue and profits. Known for its extensive range of watches and jewelry brands, the group is facing major challenges in several key markets.
For the first half of 2024, Swatch Group’s revenue reached CHF 3,445 million (approximately 3,617.25 million USD), representing -14.3% against the previous year at current exchange rates (-10.7% at constant rates) with currency impacts also contributing negatively by CHF 145 million.
Challenges in the Asian Market: Downturn in China
The most significant impact on revenue came from a slump in demand for luxury goods in China (including Hong Kong and Macau) and the Southeast Asian markets. Swatch Group heavily relies on Chinese tourists, had a significant detrimental effect on sales and outcomes due to the strong presence of the Group’s brands in the region. Nevertheless, the Swatch brand itself recorded a 10% increase in sales in China over the previous year.
In Europe, the group’s direct retail operations maintained stable sales at the previous year’s levels. Geopolitical conflicts, however, led many European retailers to experience uncertainty, prompting them to reduce restocking, which resulted in a more than 10% decrease in wholesale sales. In contrast, Switzerland and Spain showed exceptionally positive results.
In the United States, the group matched its record sales from the previous year. In Japan, which is one of the most important countries for luxury goods and the third-largest export market for Swiss watches, sales grew by over 30% compared to the previous year. Other key countries like South Korea, India, and the United Arab Emirates also reported performances significantly above the previous year.
Brand Performance
Luxury brands such as Breguet, Blancpain, and Omega were particularly affected by the tough market conditions, while Harry Winston showed favorable results. Other brands such as Swatch, Tissot, and Longines maintained strong positions.
The demand for the MoonSwatch, a collaborative release by Omega and Swatch, as well as the Scuba Fifty Fathoms Swatch, remained consistently high throughout the review period. This surge in interest was further fueled by the successful launch of new models under the “Mission to the MoonPhase” series, namely “New Moon” and “Full Moon”. Additionally, the introduction of three new “Mission on Earth” models— “Lava,” “Polar Lights,” and “Desert”—contributed to this momentum, accelerating their market success.
Outlook for the Future: Recovery and Growth in the Chinese Market
Looking ahead, Swatch Group anticipates that the luxury goods industry will continue to face challenging conditions in the Chinese market (including Hong Kong and Macau) until the end of the year. However, the potential in China remains robust, and the current situation presents an excellent opportunity for the group’s brands to achieve further growth and expand market share, especially in the lower-price segment.
Strong growth is expected in Japan and the USA in the latter half of 2024, likely accelerated by investments in the group’s unique retail network. In Europe, Omega, serving as the official timekeeper for the Paris Olympics, is set to benefit from global media coverage.
Finally, the company added, “The cost-cutting program introduced at the start of the year has begun to bear fruits. The full positive impact, particularly on results in the Production segment, will be felt in the second half of the year,” and predicting significant improvement in the situation in the latter part of 2024.