Swatch Announces Record CHF 4.5 Billion Sales
February 02, 06
The Swatch Group today announced an 8.3 percent boost in sales, which reached a record CHF 4.5 billion. The gross sales of watches and jewelry increased from CHF 3141 million in 2004 to CHF 3427 in 2005; an 8.6 percent rise. The luxury watch division showed the most substantial increase.
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Droz brands as well as the Omega brand, saw substantial double-digit growth. The premium and mid-price segment also achieved strong growth, especially the Longines, Rado and Tissot brands during the second half of the year as a result of the additional marketing push in the first half of the year. Swatch also reports that it reached its sales target increase in the low price segment, which is headed by the Swatch brand.
Swatch also reported higher sales across its other divisions, which include production and electronic systems and general services. However, sales of watches, movements and stepping motors in millions of units declined from 127.2 million units in 2004 to 107.5 in 2005; a drop of 15.5 percent.
The decrease in unit sales of watches, movements and stepping motors by approximately 20 million units, says the group, can be attributed to two main factors: on the one hand, to the planned and already announced reduction in the amount of movements in the lowest price category manufactured and sold in the Far East, and on the other hand, to the considerable fall in sales of stepping motors due to the decline in the US automobile market.
Swatch anticipates that strong increase in sales in the watch segment, in particular high-end watches, will lead to a substantial increase in operative margins in this segment. Factors which weighed down business in the first half of the year, such as higher commodity and diamond prices, additional marketing expenditures in the US for the Omega, Longines and Tissot brands, investments in customer service and the adverse effect of negative currency movements, were able to be partially offset.
"The group expects 2005 to be a record year, both in terms of operating result and group net income. The group’s successful strategy and the rigorous manner in which it is implemented will provide the basis for continued very solid growth in 2006 as well," said Swatch in a release.