The encyclopedia · Strategy & Leadership · Strategic decision · 2022–2024
Swatch Group's profit fell fourfold in China's luxury slump — the Swatch brand grew 10%
Omega, Longines and Tissot sank with Chinese demand. The ¥100 Swatch watch rose. The group's own portfolio showed where the market was going.
Swatch Group · 2025-01-30
What happened
In the first half of 2024, Swatch Group's net sales fell 14.3% to CHF 3.45 billion. Operating profit collapsed from CHF 686 million to CHF 204 million; the operating margin contracted from 17.1% to 5.9%. Net profit fell from CHF 498 million to CHF 147 million. Shares dropped more than 11.5% in a single day — the worst in over four years.
The group attributed the decline to a slump in demand for luxury goods in China, including Hong Kong and Macau. China's property slump and job insecurity had dampened consumer confidence. CEO Nick Hayek acknowledged that Chinese consumers had become 'more price sensitive'. Sales outside China, in local currencies, held at 2023 levels.
Within the group's own portfolio, the Swatch brand — the cheapest line — increased its China sales by 10% while Omega, Longines and Tissot declined. The full-year 2024 results confirmed the pattern: net profit fell fourfold to CHF 219 million from CHF 890 million. Vontobel analyst Jean-Philippe Bertschy called it 'an ugly half year for Swatch Group in all respects.'
Why it happened
- The group's luxury-tier brands (Omega, Longines) were overexposed to Chinese aspirational spending, which contracted sharply as the property crisis hit consumer confidence
- The mid-range brands (Tissot, Rado) had no distinct positioning to defend against either luxury or value segments
- The Swatch brand's 10% growth in China showed demand existed at accessible price points, but the group's cost base and retail footprint were built for the luxury segment
- Cost-cutting measures were announced but their full impact was deferred to H2, leaving the group exposed through the worst of the downturn
The lesson
A portfolio that spans value to luxury is only a hedge if the value tier is resourced to grow when the luxury tier stalls — otherwise the cost base follows the luxury revenue down.
Aftermath
Swatch Group expected the situation to improve in H2 2024 and pointed to strong growth prospects in Japan and the United States. The group said there were 'excellent opportunities' in the lower price segment. The full-year 2024 results, reported in January 2025, showed the China drag had persisted through the second half.
Sources
- CNBC: Swatch sales fall 14.3% in first half of 2024
- FashionUnited: Swatch Group results weighed down by China in 2024
spotted an error? The club wants to know.
More like this
Swatch called the Apple Watch a joke — and watched its own sales decline for a decade
Jaquet Droz, Swatch Group's high-end watchmaker, ended its 18-year Japan business
Hermès and Exor spent 15 years building a Chinese luxury brand, then wrote it off
Somewhere, someone solved the problem this company failed at. 2nd Opinion →
Comments · 0
Sign in to join the comments.