With sales down 34% the past 6 months and a two year stock performance that should shake even the most optimistic of stockholders, what does one do? Adapt, innovate and make stellar products? Hopefully, but also – cut jobs.
This is a rather unusual measure at the group. Hayek has stated in the past that where possible, his preference is to not have to take this route and just ‘wait it out’ so all the skilled workers are ready to go when the market picks up again.
In a way – still in line with that strategy – Hayek’s cuts are not felt at a production level, as these jobs seem to have been safeguarded. It is however the sales network, the shops that will have felt the cuts the most. Bloomberg reported Swatch Group closed 260 stores with about 1800 remaining. A lot of closures are to be linked to the end of the group’s 22 year sales contract with Calvin Klein.
I’m not overly optimistic that this will be the end of a much needed shake-up at the group. Why? Despite this two-year-long beatdown of epic proportions, the group stayed positive for the 2nd half of arguably one of the most savage business years since the Quartz revolution. Do they stay positive because they have some incredibly good products or services lined up? No – the reason the group maintains a positive outlook for the second half of the year is, and I quote “the group is set to introduce new products, including James Bond Omega timepieces and a Tissot smartwatch”.
If the biggest aces the group has up its sleeve are yet another Bond watch and a Tissot smartwatch, forgive me if I’m not going all-in on Swatch Group shares.