Swatch Group Net Sales Up 1.9%

The Swatch Group, the world’s biggest watchmaker, said its 2008 gross and net sales finished just ahead of its record 2007, despite the “very challenging [worldwide] market environment.” Its 2009 outlook is “cautious but not pessimistic,” anticipating “a rather manageable recession” and a rebound in 2009’s second half.

Its preliminary 2008 report was released Thursday at its Biel, Switzerland, headquarters.

The company’s watch and jewelry gross sales grew 1.8 percent (in Swiss francs, CHF) in 2008 to almost CHF4.8 billion (about $4.2 billion), while net sales rose 1.9 percent to about CHF4.5 billion ($3.8 billion). Its watch, movement and component production segment saw “solid growth,” with gross sales increasing 7.5 percent, to CHF1.8 billion (almost $1.6 billion) and net sales up 7.3 percent to CHF1.7 billion ($1.5 billion).

In much of 2008, all price categories of its watches and jewelry reported higher sales (in local currencies) than in the very strong 2007, says the Group. However, a noticeable drop in demand in 2008’s final months (mainly at the wholesale level) “reduced the momentum in most brands and markets,” it says. “Even the luxury brands could not entirely escape this unfavorable trend.”

Some countries in Asia, especially China, and in the Middle East had double-digit sales growth. However, results in Europe were “more modest” as recessionary fears began to “weigh on consumer confidence in several countries and markets towards the end of 2008. The slowdown was more acute in the USA in the last few months of 2008,” though that was offset somewhat by growth in other markets.

Meanwhile, rising demand for watch movements and components pushed sales up over 2007. The Group’s “highly integrated, efficient production capabilities were much sought after” by external customers and its own brands, especially Swatch, Flik Flak [its children’s watch] and “special calibers financed by [its] brand companies.”

Overall, 2008’s total gross sales for the Swatch Group (which also produces electronics systems, which lost business) rose just 0.4 percent ahead of 2007, a record year, or almost CHF5.7 billion ($5.2 billion). Net sales were almost CHF5.7 billion (over $4.9 billion).

Even though the Group expects a challenging environment, especially in 2009’s first months, says the report, it expects “confidence at the international level can be restored in the second part of the year, [resulting in] modest growth in 2009 over 2008.”

The Swatch Group, the world’s largest watchmaking group, makes and sells finished watches, jewelry, watch movements and components. Its watch brands include Breguet, Blancpain, Glashütte Original, Jaquet Droz, Léon Hatot, Omega, Longines, Rado, Union Glashütte, Tissot, ck watch & jewelry, Balmain, Certina, Mido, Hamilton, Swatch, Flik Flak, and Endura. It also produces Tiffany & Co. watches.