Swatch Is Seeing Gross sales Hunch, and It is Due to China

• Watch group Swatch noticed its gross sales decline by greater than 12% and its earnings by 75% in 2024.
• It attributed its weak outcomes to a “persistently tough market state of affairs” in China.
• 2024 was a nasty yr for luxurious manufacturers, from LVMH and Kering to Champagne producers.

Swatch reported weak gross sales and a significant stoop in working earnings in 2024, owing largely to weak demand from Chinese language shoppers.

The luxurious watch group, which owns watch large league manufacturers like Omega, Tissot, and Longines, noticed its gross sales decline 12% and its earnings drop about 75% final yr.

Within the earnings press launch revealed on Thursday, the group posted internet gross sales of 6.7 billion francs, or $7.4 billion. This was a 12.2% decline from 2023 when it earned 7.9 billion francs.

Its working revenue dropped about 75% from about 1.2 billion francs in 2023 to 304 million francs in 2024.

The group attributed the outcomes to a “persistently tough market state of affairs and weak demand for client items general in China.”

Swatch’s press launch mentioned gross sales in China, together with Hong Kong and Macau, slid round 30% in 2024.

It additionally added that there was a “large drop in demand for client items” in Southeast Asian markets, which it mentioned are “closely depending on Chinese language vacationers.”

Nevertheless, it reported stronger gross sales in different key markets, such because the US, Japan, India, and the Center East. It mentioned that within the US, Tissot gross sales exceeded $100 million for the primary time.

Total, luxurious Swiss watchmakers struggled with weak demand in 2024. In September, Bloomberg reported that Girard-Perregaux and Ulysse Nardin, Swiss luxurious watch manufacturers owned by Sowind Group, turned to the federal government for monetary help to deal with low demand.

In the meantime, the Rolex resale market has additionally been cooling for greater than two years after its COVID-era excessive, owing partly to a surge of watches coming into the market.

A foul yr for luxurious items

Watches usually are not the one luxurious merchandise impacted by waning demand in China.

In 2024, general luxurious spending stagnated, and massive manufacturers noticed their share costs drop. Kering, the proprietor of Gucci, YSL, and Balenciaga, noticed its inventory fall greater than 40% final yr.

And luxurious conglomerate LVMH’s gross sales declined by 3% within the third quarter of 2024, partly due to weakened client confidence in China.

Representatives for Swatch didn’t reply to a request for remark from Enterprise Insider, despatched exterior common enterprise hours.