ZURICH, Jan 24 (Reuters) – Swatch Group (UHR.S) shares hit their highest stage in almost two-and-a-half years on Tuesday after the world’s largest watchmaker mentioned it anticipated a restoration in luxurious demand from China.
The maker of high-end Omega, Tissot and Longines timepieces in addition to its eponymous mass-market plastic watches mentioned gross sales in China in January had already exceeded the excessive ranges seen in January 2022.
The Swiss firm mentioned it expects report gross sales in 2023 boosted by the return of demand in China, Hong Kong and Macau, which was hit by the return of COVID-19 circumstances final yr, and as Chinese language vacationers resume their travels.
“Group Administration anticipates sturdy gross sales progress in 2023 in all areas and segments,” Swatch mentioned, noting that consumption had shortly recovered in Hong Kong and Macau in addition to China after pandemic restrictions had been lifted.
“As well as, lifting of journey restrictions in China will revitalise gross sales in vacationer locations. The gross sales progress in January in China reinforces the Group’s expectation to purpose for a report yr in 2023.”
The outlook despatched Swatch’s shares to their highest stage since July 2021, and was the newest constructive sign for the posh sector at the beginning of the Chinese language Yr of the Rabbit.
The main target of the sector is shifting again to China, with hopes that its high-end spenders will as soon as once more splash out on designer items.
Final week Burberry mentioned it was optimistic customers in China would begin spending once more and Richemont noticed a rebound there earlier than the Lunar New Yr vacation.
For 2022, Swatch mentioned its total gross sales elevated by 2.5% to 7.499 billion Swiss francs ($8.16 billion) or by 4.6% in fixed forex phrases. Internet revenue rose 6.3% to 823 million francs.
The corporate missed its objective of accelerating gross sales by a double digit proportion, when measured in fixed currencies, however Bernstein analyst Luca Solca mentioned there was good motive for CEO Nick Hayek’s optimism this time.
“I imagine the market will take the miss leniently, as the explanations for the miss are linked to (China’s coverage of) zero COVID, and nil COVID has been phased out,” he mentioned. “For as soon as, a robust FY23E outlook appears cheap and credible.”
Another analysts remained cautious.
“To achieve the report gross sales variety of 2014 Swatch Group would want to have progress of 16% in 2023,” mentioned Patrik Schwendimann of Zuercher Kantonalbank.
“In native currencies this is able to even imply progress of 19%. As James Bond would say, “by no means say by no means once more”, however I believe the atmosphere must enhance considerably to succeed in that quantity.”
($1 = 0.9192 Swiss francs)
Reporting by John Revill; modifying by Kirsten Donovan and Jason Neely
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