Swatch Group AG, the parent company of Omega, and Watches of Switzerland Group, the UK's largest retailer of Rolex watches, have both indicated that the demand for Swiss timepieces remains strong, even as prices rise.
However, prices are up but watch lovers are still buying Rolex and Omega.
Swiss Timepieces Thriving Despite Price Rises
Swatch shares climbed as much as 7% as CEO Nick Hayek indicated revenue could reach a record this year, thanks to strong demand in China and the United States.
Separately, Watches in Switzerland increased by up to 18% as the UK store stated that demand for luxury timepieces remains strong despite price rises by some of the major brands.
In an interview, Hayek stated that demand for lower-priced watches in Asia and the United States remains high, despite first-half earnings exceeding pre-pandemic levels for the first time. He also pointed out that China has yet to fully recover.
Swiss watch exports increased in 2023 after reaching a record of more than 24 billion francs (approximately US$28 billion) the previous year. The reports allayed fears that demand for luxury products in the United States was dwindling. In April, watch exports to that market fell.
Hayek remarked:
“„What is really impressive is the [strength of the] US as well as Europe across all price segments.- Nick Hayek
The average sales per Swatch store increased by 30% globally, increasing the group's revenue from its retail network to 40% of its total.
"Here you see the strength of consumption, even in the US," stated the CEO.
According to the maker of Omega and Longines watches, operating profit increased 36% to 686 million francs in the first half. Analysts had predicted 604 million Swiss francs.
Revenue surpassed the previous first-half record of 4 billion francs set in 2018. Hong Kong sales tripled, while mainland China sales increased by double digits.
According to the corporation, the lowest-price segment of watches and jewelrygrew the most. Demand for the popular Omega MoonSwatch collaboration, which retails for roughly US$260, has increased.
According to Swatch Group, tourist areas such as Thailand and Macau benefited from a revival in travel. Switzerland saw a 50% increase in sales, followed by robust growth in areas such as Italy, Spain, and France.
A weak US dollar and euro against the franc reduced first-half income by 242 million francs.
According to the company's half-year report, the second half of 2023 has "excellent" development potential. "The only cloud on the horizon remains the unfavorable currency environment," the report reads.
In the United States, Omega and other Swatch brands recently raised pricesby roughly 8%, which could mitigate some of the foreign-exchange impacts. Hayek stated that he does not expect the price increase to hinder sales because fresh product launches will increase demand.
Watches of Switzerland reported sales of £1.54 billion (US$2 billion) for the fiscal year ending April 30, matching experts' expectations. The businessreiterated its 2024 full-year outlook.
Waiting lists for the most popular timepieces are growing, as are average selling prices, according to CEO Brian Duffy in an interview. Rolex hiked its UK prices by an average of 2.5 percent across the board in January, with some models seeing larger increases.
Duffy added:
“„Elevated conditions remain and we are adding more people to the waiting lists than we are managing to take off, despite us editing down some of the names.- Brian Duffy
According to The New York Times, one executive stated, "Let’s face the reality, this is a trend in the luxury business. And we are part of that business.”