At Baselworld a year ago, I asked Swatch Group CEO Nick Hayek his figure for 2017. “A decent year,” he said. He anticipated that Swatch Group deals would bounce somewhere in the range of seven and nine percent. “I don’t see a motivation behind why not,” he said.
That appraisal appeared to be uncontrollably hopeful. At that point, the Swiss watch industry’s two-year droop was hurtling through the main quarter of 2017. The Federation of the Swiss Watch Industry was anticipating a level year for the business all in all. Killjoys like me were sounding the alert about a practically inconceivable (twice in 131 years) consecutive to-move decline in Swiss watch exports.
It turns out that Hayek was correct. The Swatch Group had a decent 2017. Watch and adornments deals, which represent 96% of gathering income, increased 7.3% at steady trade rates in 2017 (6.9% at current trade rates) to 7.70 billion Swiss francs ($7.84 billion), the company reported on Tuesday. For the gathering’s all out incomes, Hayek was close: they bounced 5.8% (consistent rates) and 5.4% (current rates) to CHF7.96 billion ($8.10 billion). Net income expanded 27.3% to CHF755 million ($768.7 million.) Those outcomes finished two years of decreases in net deals at the gathering and a three-year drop in net income. (See charts.)
The Swatch Group is the world’s biggest watch company (estimated by watch incomes), with 20 brands traversing the value range from Swatch at the base to Breguet at the top. The gathering beat the more extensive Swiss watch industry a year ago; complete Swiss watch sends out bounced 2.7% in 2017.
Second-Best December Ever
The Swatch Group results are the best pointer yet that the Swiss watch industry has entered a recuperation that began in the second 50% of 2017 and hit a crescendo during the occasion selling season. Sample Group watch and adornments deals developed 14.9% in the final quarter. December 2017 “recorded the second-best month to month deals throughout the entire existence of the Swatch Group,” the company said.
High-evaluated watches drove the way. “The most grounded increment [was] in the glory and extravagance fragment,” the gathering said. That portion comprises of seven brands: Breguet, Harry Winston, Blancpain, Glashütte Original, Jaquet Droz, Léon Hatot, and Omega. The gathering doesn’t reveal deals by brand. Be that as it may, it refered to Harry Winston for an “uncommon execution” for the year, and Omega for “a solid quickening in the second 50% of the year.”
The company said its low-and mid-evaluated marks likewise had a decent year. “Flik Flak, Swatch, Calvin Klein, Hamilton, Mido and Tissot accomplished amazing development rates in the second 50% of 2017, while trade figures for the Swiss watch industry were plainly negative in these portions,” the company said. “This demonstrates a huge addition in piece of the pie.” The company called attention to that Tissot’s yearly deals surpass CHF1 billion, placing it in the positions of “selective Swiss brands” that have passed that milestone.
Sales were most grounded in the Asia/Pacific area, both at discount and retail, the gathering said. (The gathering doesn’t separate deals by conveyance channel.) Most remarkable was territory China, where the gathering is exceptionally solid. In addition, deals in Hong Kong recuperated a year ago and “are on a development track,” it said.
One factor in a year ago’s turnaround was its no-cutback strategy, the company said. The Swatch Group utilizes in excess of 35,000 individuals (35,400 as of the finish of December) and has an arrangement of few-to-no cutbacks during declines. “The methodology of intentionally keeping up positions substantiated itself indeed in 2017,” the company said. “The exceptionally solid exhibition in the second 50% of the year again affirms the legitimacy of the Swatch Group system to hold staff even in troublesome occasions.” It empowers the gathering to react immediately when business gets, Hayek says. That approach varies from different firms in the business. The Richemont Group, for instance, laid off 300 individuals in Switzerland in 2016. Industry wide, an aggregate of 2,000 individuals were laid off in 2015-2016, says Jean-Daniel Pasche, leader of the Federation of the Swiss Watch Industry.
The solid completion to 2018 extended into January, the gathering said, for “a decent begin the new year on the whole portions.” Its standpoint for 2018 is cheery: “The Swatch Group envisions further certain development in nearby monetary forms in 2018,” it said.