Swatch Group's watch brands Omega, Longines and Blancpain added to the industry's growing optimism on Monday by giving themselves the target of lifting sales to a new record this year after a tough 2009. The three companies said 2010 had started strongly, cementing the view that the Swiss watch industry, a pillar of the luxury goods industry, was set to recover after falling 22.3 percent last year to 2006 levels.
Swatch Group Chief Executive Nick Hayek, told Reuters at the Basel watch and jewellery fair, the industry's most important annual gathering, that the year had begun well for the group. "January and February were very good and March becomes again a month that is extremely good," he said, as he walked around the plush premises of the gigantic fair, shaking hands of clients and senior managers of Swatch Group brands.
But watchmaker Tissot, which is also part of the Swatch Group, cautioned last week that the pick-up could still be technical as retailers were replenishing depleted stocks, implying it was too early to rejoice about consumer demand. Independent watchmaker Patek Philippe went so far as to say that it was not clear yet if the downturn was behind it.
"I think we have to be cautious. We could still be in the middle of the tunnel," Patek Philippe Chairman Thierry Stern told Reuters in an interview in Basel on Monday. "Many people are betting on China but China could close up and impose high taxes."
But Longines, one of the biggest money-makers at Swatch and the only brand at the group with Tissot to have enjoyed any growth last year, was markedly more upbeat, saying it aimed to lift sales by as much as 25 percent in 2010. Longines watches sell for between 550 euros ($743) and 2,300 euros.
Asked about trading this year, Longines President Walter von Kaenel told Reuters at the Baselworld fair: "Ten percent is the official version but personally, I am aiming for 20-25 percent." "So, I would say 10-25 percent," he added. Kaenel said Longines' big exposure to the Chinese market, which accounts for more than 30 percent of its sales, had helped it weather the global downturn.
Meanwhile, sister Swatch brand Omega said it aimed to propel sales this year beyond its previous record set in 2008. "Our objective for this year is to do better than 2008 ... (which was) a record year for Omega and for the (Swatch) group," Omega President Stephen Urquhart told Reuters in an interview. Omega, whose timepieces sell on average for about 3,000 euros, is one of Swatch's upper middle-range brands, which sits next others such as Breguet and Glashutte Original.
Overall, Swiss watch executives said the mood at Basel this year was much more optimistic than in 2009, but items in the middle of the price range remained vulnerable as the downturn had made consumers more careful about purchases. "What has suffered the most is the middle of the price range," Blancpain President and Chief Executive Marc Hayek said.
He said the brand had started making a few more steel models than before to offer consumers cheaper choices than gold or other expensive metals for certain models. But orders in Basel this year beat his own expectations, Hayek said. And on that basis, he expected Blancpain's 2010 sales to match, if not beat, record levels from 2008.
"If we match the level of 2008, I will be happy," Hayek said. "Before Basel, I thought we could reach the same level (as) 2008 but now perhaps we could have double-digit growth." If orders continued to rise, Blancpain would have to hire more staff "but it is difficult to find good people," Hayek said. Rival LVMH's watch brands Tag Heuer, Hublot and Zenith, which have been hit hard by the spending slump, said they expected sales this year to rise in double-digit terms.
But some analysts have pointed out that their targets for recovery were also a reflection of the extent to which their sales collapsed last year. Swatch shares closed down 1.53 percent at 333.80 francs, having reached intraday high of 343.10 francs on Friday, their highest since December 2007. The STOXX personal and household goods index was up 2.2 percent.
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