bloomshorts Swatch’s Profit Takes a Hit from China’s Slowing Economy
Swatch Group, the world’s leading watch company, has announced a significant drop in profits for the first half of the year, primarily due to declining sales in China.
Net sales decreased by 11.2% to 3.1 billion Swiss francs ($3.8 billion), with net profit plummeting by 88% to just 17 million francs. The company pointed to China as the sole reason for the sales decline, noting that other regions achieved record sales levels comparable to those in 2023 and 2024.
China’s Economic Challenges Impact Luxury Brands
Swatch, which owns prestigious brands like Omega, Longines, and Tissot, has seen China’s contribution to total sales drop from a third to under a quarter. This shift is attributed to China’s economic struggles, including a real estate crisis that has dampened consumer spending.
Sales to Chinese wholesalers fell by 30%, and retail store sales in China were down by 15% in the first half of the year. However, Swatch has observed initial signs of recovery in China and anticipates a better market environment in the latter half of the year.
Growth in Other Markets Offers Hope
Despite the challenges in China, Swatch reported double-digit sales growth in North America, India, Turkey, the Middle East, and Australia. The company highlighted the USA, Japan, and India as regions with significant growth potential and expects increased production capacity utilization in the second half of the year, thanks to new product launches.
