There is a peculiar kind of irony unfolding in Switzerland. Swatch Group, the company that once rescued the Swiss watch industry from the brink of extinction, is now being told by its own shareholders that it needs rescuing from… itself?
Over the past year, shares in Swatch Group have dropped significantly, a continuation of a multi-year decline from their 2014 high. A company once valued at CHF 34 billion is now worth a “mere” CHF 7.7 billion. That’s a staggering erosion of market confidence for a group that counts Omega, Longines, and Tissot among its crownCrown The knob on the outside of the watch that you typically use to either wind the mainspring or set the time [Learn More] jewelsJewels Watch jewels are small, synthetic sapphire or ruby bearings that are used in mechanical watches to reduce friction and wear on moving parts. They are typically made from corundum. They are used as bearings for a.o. the pivots to reduce friction. [Learn More]. But numbers alone can’t tell the full story. Behind those losses is a growing frustration, not just from institutional investors or analysts, but also from long-time industry observers who have watched the company drift from its former glory.
Much of the discontent now converges on Swatch’s leadership, specifically CEO Nick Hayek and his sister Nayla Hayek, who chairs the board. Nick Hayek, son of Swatch founder Nicolas Hayek, has led the company since 2003. Under his watch, the group has remained fiercely independent, proudly manufacturing nearly all of its watch components in-house, and building a vertically integrated empire of more than 150 production sites. But that same independence has, in recent years, curdled into isolationism. Hayek’s aversion to the financial community is by now legendary. His reported retorts to shareholder concerns, “If you don’t like how it’s run, invest elsewhere”, may be colorful, but they betray a deeper reluctance to evolve. That reluctance is of course not unique to Swatch group.. this is the Swiss Watch industry after all.
Investors have taken him at his word. Some, like Steven Wood of GreenWood Investors, are now attempting to force their way in. Wood, who owns just 0.5 percent of Swatch shares, is vying for a seat on the board, campaigning on a platform of transparency, governance reform, and basic communication. He’s highly unlikely to win; the Hayek family controls 44 percent of voting rights with only 25 percent of the equity. But his candidacy is a symptom of broader shareholder fatigue.
The trouble is not merely managerial disconnect. It’s the missed opportunities. In a watch industry increasingly defined by brand storytelling, heritage, and precise product segmentation, Swatch has struggled to keep pace, despite holding some of the most storied marques in horology. Omega, the group’s flagship, saw sales drop 20 percent from 2019 to 2024. Longines is down nearly 30 percent. And Breguet, once a darling of European royalty and a legitimate peer of Patek Philippe and Audemars Piguet, has seen its sales halved over two decades and now reportedly runs at a loss.
Swatch’s one recent hit, the MoonSwatch collaboration between Omega and Swatch, seemed like a turning point. Colorful, affordable, and tied to one of the most iconic chronographs ever made, the collection generated queues outside boutiques and introduced a new audience to the romance of Swiss watchmaking. Over a million units sold. But for all the buzz, the project now appears to be an exception rather than a model. Sales are projected to drop to 1.5 million units this year, and there’s little sign that the momentum has transferred to other parts of the group’s portfolio.
Meanwhile, the macroeconomic headwinds are intensifying. China, long the backbone of Swiss watch exports, has cooled dramatically. Swatch’s own performance there has lagged the broader slowdown, with sales in the region reportedly down by 30 percent. Add to that a strong Swiss franc and mounting U.S. tariffs, and the group’s export-driven model looks increasingly exposed. Note that this is obviously not a limited to the Swatch Group, this is clearly a challenge that the entire Swiss (export oriented) industry will be facing the coming months & years.
Yet, in the abovementioned FT article, it appears that Nick Hayek remains defiant. He insists that the group’s long-term health is more important than short-term share prices. I can only agree with that vision which in theory is indeed admirable. In practice, it has meant ignoring the call for modern corporate governance, failing to develop succession plans, and rebuffing input from brand-level executives who might otherwise inject some much-needed creativity and agility into the business.
This stubbornness is made all the more frustrating by the company’s latent potential. It is home to some of the finest watchmaking talent and history in the world. It builds its own escapements, cases, dials, crystals, even the silicon used in its quartz movements. Its brands are household names across continents. But potential, like legacy, cannot be banked forever. There is still time to change course.
Until then, Swatch remains what it has become: a company that once saved Swiss watchmaking from obsolescence, now flirting with its own.
This post was ‘triggered’ by an excellent recent read in the Financial Times also delves into the details for anyone wanting to know, you can check it out here.
A Legacy in Peril?