Swatch Group on Friday said its first-half profit would slide 50-60 percent on dwindling sales in Hong Kong and Europe, and analysts warned that the deadly Bastille Day attack in Nice would hurt tourist sales for the foreseeable future.
Swiss watchmakers are grappling with weak demand as fewer Chinese tourists shop for timepieces in Hong Kong and Europe and a strong Swiss franc pushes up the production cost for "Swiss made" watches.
The world's biggest watchmaker said in a statement it expected sales to fall about 12 percent in the first half due to "important markets like Hong Kong and partially Europe, especially France and Switzerland, while mainland China develops positively".
Shares in the group were indicated to open 9 percent lower, on top of a 17 percent fall this year and a 21 percent drop last year.
The group said it would keep its staff and also maintain investments in new products and marketing, and pursue a defensive price increase policy even though this meant an important hit to its margins.
"The operating profit and the net income are expected to be lower by some 50-60 percent," the maker of Omega, Longines and Swatch watches said, adding it would publish full first-half results on July 21.
Swatch Group is facing even more headwinds than rivals because, unlike Richemont, it has little exposure to the flourishing jewellery category and its entry-price brands face fierce competition from smartwatches like the Apple watch.
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