Swiss watch manufacturer Swatch Group announced its full-year performance for 2024 on Thursday, with both sales and profits declining. Despite some improvement in the U.S. and Japanese markets, it was unable to offset the severe downturn in the Chinese market.
Swatch Group, the world’s largest watchmaker, owns brands such as Omega, Longines, and Tissot. The company reported a 14.6% decrease in full-year sales in 2024, totaling 6.74 billion Swiss francs (approximately $7.44 billion), falling below market expectations of 6.95 billion Swiss francs.
Net profit plummeted from 890 million Swiss francs the previous year to 219 million Swiss francs, significantly lower than the market’s forecast of 365 million Swiss francs.
The company stated that it faced a “continuously severe market environment and weak consumer demand” in the Chinese market, with sales in China and Southeast Asia dropping by 30% year-on-year. As these markets heavily rely on Chinese tourists, overall performance was severely impacted.
This trend reflects the impact of China’s economic slowdown on luxury brands. Analyst Patrik Schwendimann from the Zurich Cantonal Bank pointed out, “Swatch Group’s reliance on the Chinese market is higher than its competitors.” The company’s sales in China, Hong Kong, and Macau decreased from 33% in 2023 to 27% in 2024.
Overall, the Swiss watch industry performed poorly in 2024, with total watch exports decreasing by 2.7% in the first 11 months, including a 26% decline in exports to the Chinese market.
Due to the poor performance, Swatch Group’s stock price dropped by 7% in early trading in Zurich on Thursday. Over the past year, its stock price has fallen by approximately 25%. Swiss watch export data showed that in December 2024, exports declined for the fourth consecutive month, dropping by 5.4% year-on-year, with exports to China down by 19%.
Nick Hayek, CEO of Swatch Group, stated, “We acknowledge the possibility of a short-term decline in profit margins but choose to maintain production capacity and employment to respond quickly when demand rebounds.”
“Our mistake was being overly optimistic about the market at the beginning of 2024,” added Hayek.
Swatch Group mentioned that despite the continued low demand in the Chinese market, the company expects sales and performance to significantly improve in 2025.