More data that reports of the Swiss watch industry’s death at the hands of Apple were premature: Nick Hayek, chief executive of the Watch Group, has just declared that sales this summer have accelerated at a “spectacular” rate. Hayek says the Financial Times that the Watch Group, which was facing gloomy forecasts fair recently, returned to profitable growth in the first half of the year.
The “most competitive growth” among the company’s portfolio of brands has come from Omega and Blancpain, he notes. What’s more, the Watch Group owns Breguet, Harry Winston, and Glashütte Original, among others. As the FT notes, not all the industry’s woes were brought on by the smartwatch assault; heavy overstocking in Hong Kong, sluggish global economic growth, and “shifts in consumer and tourist spending patterns” were to blame as well.
In June, the Swiss watch industry federation this week reported that exports were 5.3 percent higher than a year earlier — the second consecutive month showing a meaningful year-on-year growth. Despite the Apple Watch replica almost beating every Swiss watch company, there is a recent change in sales. “The acceleration between the first and second quarters was spectacular,” Hayek notes. He expects fake Watch Group’s net sales to grow at a year-on-year rate of 7 percent to 9 percent in the second half of the year. “In July, our factories are at maximum capacity because the demand coming from our own brands is so strong. At some factories we’re already at the limit.” Watch also makes watch components for third parties.
Different from the rival Richemont, Watch refrained from laying off employees in the wake of last year’s downturn, which now looks like a smart move, as it enables them to handle the uptick in need. “If volumes come back and your machines are running at full capacity, then, of course, you add to your margins,” Hayek tells the Financial Times. Investing in the Watch Group’s top-end watches is probably a good idea. But their stock may be an even better bet. The replica Watch’s share price has risen more than 40 percent over the past year. However, not everyone is as sanguine.