Analysis: Luxury Group Stock Comparison

Not long ago, Jan wrote two stories about Swatch Group stocks taking a dive and did a comparison with Richemont Group, the other big watch conglomerate, whose stocks also dipped but not the same scale as Swatch Group.

I decided to take a step further and compare them to other luxury groups who are also big players in the watch industry, namely LVMH and Kering Group. As you can see in the growth chart below, the past 6 months has been brutal for Swatch Group (green on the chart) in comparison with Richemont, LVMH and Kering Group and especially against the overall international market index of MSCI EAFE.

Without providing a plethora of analysis that will bore you to death, the simpler explanation is the lack of diversification within Swatch Group vs its competition.

Kering SA, LVMH both have large watch divisions, but their primary focus is the luxury goods industry and watches are a part of their portfolio rather than the main focus. In comparison, Swatch is mainly a watch conglomerate that has a small non-watch luxury product in Harry Winston. Richemont, has a similar profile to Swatch Group, but offer more non-watch luxury products in their brand line up with Cartier, Dunhill, Montblanc, and Van Cleef & Arpels. Which somewhat provides a hedge to a loss of sales in watch divisions.

Lastly, if you look at the graph above. In the past year, Swatch Group stock was actually outperforming both the overall market index and it’s rivals in April.