Sales of upmarket watch brands rose sharply in the first half of the year, Swatch Group reported yesterday, underlining the recovery in the luxury goods sector after three difficult years.
Revealing a 16.7 per cent rise in net profits to SFr217 million (€141.1 million), Swatch said sales of its luxury brands, led by Breguet, had been particularly strong. The increase came in spite of a higher-than-expected SFr20 million additional marketing bill linked to Swatch's sponsorship of the Olympics.
The company provided no details of its 18 individual brands but it noted that the luxury range, which includes the core Omega brand, was selling "extremely well", while mid-range brands such as Tissot had "developed very positively".
Swatch said consumer sentiment had "stabilised and improved slightly in Europe, with larger growth being achieved in the US and Asia".
The company was upbeat about the full year in spite of tough comparisons with the second half of 2003 when demand started to recover. Swatch hinted it might even have difficulty meeting orders given the demand shown at April's Basel trade fair.
Swatch shares rose SFr1.25 to SFr154.5. Expectations of a sector rebound have lifted stocks such as LVMH and Richemont.
"Swatch Group has had a good first half, clearly gaining market share versus the Swiss watch industry," noted Scott Weldon of LODH, the private bank.
Swatch Group sales, which include movements for third parties and electronic components, rose 8.6 per cent to SFr1.97 billion. Watch revenues jumped by almost 13.7 per cent, outpacing the industry.
