The last three quarters haven’t been kind to the watch industry, however the year closed nicely in the green as reported previously. Swatch Group, has however posted both a pretty grim last quarter and also lower than expected financials for 2018.
This now results in the stock trading a fairly dramatic 18% lower than just three months ago:
When looking at the Swiss watch export data a few days ago, we noticed that 2018 wasn’t a bad year but it did also suffer in the last quarter. Despite that though, the industry had a pretty good run in 2018. However, when looking at the Swatch Group’s performance for 2018, the story is quite different:
According to Swatch Group, the last quarter going in the red was a result of a downturn in Asian demand and also a terrible performance in France. The slowing demand from Asia is of course nothing new, and the French weak performance is a direct result from the ‘yellow vest’ protests which coincided with the usually very busy Holiday sales season. Retailers here essentially ‘missed’ the busiest shopping season of the year due to the protests.
Another reason will certainly be the dramatic fall in sales of < CHF 500 watches. This was very clearly seen in the Swiss watch export data, as we’ve highlighted previously. That segment has taken an absolute beating and that is of course a segment where more than a few big names from Swatch Group operate.
Despite the results, the Group maintains a positive outlook for 2019, citing the good January numbers signalling a change.