Swatch expects bumper sales as China emerges from Covid restrictions

Swiss watchmaker Swatch is anticipating record sales this year as China reopens after exiting its zero Covid-19 policy and tourism resumes.

Net sales rose 4.6 per cent to SFr7.5bn ($8bn) last year at constant exchange rates, compared with a year earlier. Operating profit increased 13 per cent to SFr1.16bn, missing analysts’ forecasts of SFr1.19bn.

However, sales increased 25 per cent in local currencies in all regions, with the exception of China, where Covid-19 lockdowns meant a shortfall in sales of more than SFr700mn, Swatch said.

“After the end of Covid-19 measures, consumption quickly recovered, not only in China, but also in the surrounding markets of Hong Kong SAR and Macau,” Swatch said in a statement on Tuesday.

The easing of travel restrictions in China will “revitalise sales in tourist destinations”, it added, saying that January’s sales growth in China “reinforces the group’s expectation to aim for a record year in 2023”.

Beijing’s zero-Covid strategy over the past three years “severely dampened” growth, it said.

Swatch has “massively” increased its stock, spending on raw materials, work in progress and semi-finished goods, in view of potential energy shortages and delivery bottlenecks, it said.

“This measure will also pay off, considering higher demand in China after its zero-Covid strategy exit,” it said.

The company posted double-digit sales growth in Europe, US, the Middle East and most of Asia, apart from China.

Swatch in March launched the MoonSwatch collaboration, a £207 plastic version of Omega’s Speedmaster, prompting thousands of shoppers to queue up around the world to buy it. It notched up 1mn sales.