Virus Hits Swatch Group’s Bottom Line

RAPAPORT… Swatch Group, the owner of Harry Winston and Omega, recorded the first half-year loss in its history as the coronavirus devastated sales from February onward.

Sales dived 46% to CHF 2.2 billion ($2.34 billion) in the six months ending June 30 as the pandemic forced the closure of up to 80% of stores. This led to a loss of CHF 308 million ($328 million), compared with a profit of CHF 415 ($442 million) a year earlier, the company said last week.

“I have never thought it could happen that in the free world you have orders from government to shut down your operations,” said Nick Hayek, Swatch Group’s CEO, in a video presentation. “Now of course, this impacted us very strongly.”

While January was robust, the company’s performance subsequently deteriorated as economies around the world entered various states of lockdown. Sales of jewelry and watches, the group’s largest segment, dropped 47% to CHF 2.07 billion ($2.2 billion) for the half year.

However, figures in China improved sharply when the country reopened, the company noted. Retail sales in the important market jumped 76% year on year in May and rose 60% in June following heavy slumps earlier in the year.

“The moment the shops were open again, and — more important psychologically — [people’s fears] disappeared, the habit to buy beautiful things and brands came back very quickly,” Hayek observed.


Image: A Harry Winston store on Old Bond Street, London. (Shutterstock)