Swatch Group Swings to a Profit in H1

FinancialsJul 14, 2021

Swatch Group Swings to a Profit in H1

Plus, how the watch company is benefiting from the global microchip shortage.

A Constellation Co-Axial Master Chronometer 39MM ($20,650) by Swatch-owned brand Omega. The parent company saw sales rise 55 percent in the first half of its fiscal year. (Image courtesy of Omega)
Biel/Bienne, Switzerland—Swatch Group swung to a profit in the first half of its fiscal year as shoppers slowly returned to stores.

In H1, Swatch’s net sales jumped 55 percent at constant exchange rates to 3.39 billion Swiss francs ($3.70 billion).

The company reported a net income of 270 million Swiss francs ($294.8 million), compared with a loss of 327 million Swiss francs ($357 million) in the previous first half.

The microchip shortage affecting the global market has been a boon for the technology companies in Swatch’s Electronic Systems segment.

EM Microelectronic-Marin, one of only a few European manufacturers of ultra-low-power chips, made its way into new markets and acquired more customers. Swatch said it plans to “invest heavily” in the expansion of production capacity in Marin over the next few years.

Overall, sales recovery improved from month to month, said Swatch, with high growth rates seen in the U.S., China, Macau, and Russia.

Swatch’s number of employees fell 3 percent following the closure of 135 retail stores. In the first half of 2021, 36 new stores were opened.

 Related stories will be right here … 

Its retail stores posted above-average growth as well as a boost in e-commerce sales.

Swatch said the result “once again confirms the importance of brick-and-mortar stores as well as e-commerce as separate and additional sales channels.”

However, sales in airports and travel destinations in the first half of 2021 were still “significantly below” pre-pandemic 2019 levels.

Still, the watch company is hopeful as it looks to the year ahead, noting an ease of COVID-19 restrictions and a return of tourists.

“The already very high consumer demand will be enhanced by the further easing of COVID restrictions in many markets and generate additional growth,” said Swatch in a statement about its results.

By brand, demand was “very strong” for Harry Winston jewelry as three new flagship stores opened in Beijing, Shenzhen, and Milan.

Blancpain also put on a strong performance as it battled order backlogs and faced the challenge of quickly increasing production capacity.

Omega, the official timekeeper of The Olympic Summer Games, will be in the spotlight as the event opens later this month.

In September, in conjunction with the release of the new James Bond film “No Time to Die,” Omega will showcase its James Bond Seamaster Co-Axial Master Chronometer.

Tissot’s T-Touch Connect Solar watches will be introduced in Japan and other new markets following its debut in China and the U.S.

The Swatch brand launched new bioplastic and bioceramic models and has plans to up production capacity in the next months. 
Lenore Fedowis the associate editor, news at National Jeweler, covering the retail beat and the business side of jewelry.

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