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Swatch says new lockdowns in Europe could jeopardise 2021 sales target

Swatch says new lockdowns in Europe could jeopardise 2021 sales target

FILE PHOTO: CEO of the Swatch Group Nick Hayek attends the opening of the newly built headquarters of the Swatch brand, designed by Japanese architect Shigeru Ban, in Biel, Switzerland October 3, 2019. REUTERS/Denis Balibouse

ZURICH: New lockdowns in Europe recently and the absence of tourism might make it difficult for Swatch Group to get back to 2019 sales levels this year but the world's biggest watchmaker maintains that target for now, its chief executive said on Thursday.

The owner of luxury brands including Omega, Tissot and Longines as well as its original Swatch watches made a net loss last year for the first time in decades, it reported in January, as sales fell 32per cent from 2019 due to shop closures during the pandemic and as smartwatches made inroads into the market.

Sales are picking up this year, and the group said in January that there was a good chance it would reach 2019 sales levels this year, but new lockdowns in Europe now pose risks.

"Our aim is (in 2021) to get as close as possible to 2019, but when I look at how in Germany or Italy they are closing and opening, I don't know," Nick Hayek told an online media briefing to discuss the group's full-year results, released in January.

"Europe and Switzerland are impacting us, Switzerland is a big business with tourists, and as long as there are closures and tourism is not happening it will be more difficult of course to approach the 2019 numbers," he said.

Europe accounted for 24per cent of the group's sales last year, down from 28per cent in 2019.

Hayek, however, said consumers seemed willing to splash out on watches in markets where shops are open, like mainland China, Macau, Korea, Taiwan and Thailand. Asia accounted for 66per cent of group sales last year.

Peter Steiger, head of the company's U.S. business, said he expected first-quarter sales in the United States to be 15per cent higher than in the same period in 2019, with the company pointing to catch-up demand in markets where shops had reopened. North and South America combined, however, generate just under 9per cent of group sales.

Swatch Group shares, up 16per cent so far this year, were down 0.5per cent at 1032 GMT.

The Swiss Watch Federation said on Thursday that the industry's exports stabilised in February after falling 22per cent last year, helped by a rebound in the United States and China, while Europe and the entry-price segment remained weak.

(US$1 = 0.9243 Swiss francs)

(Reporting by Silke Koltrowitz; Editing by Riham Alkousaa, Michael Shields and Susan Fenton)

Source: Reuters

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