INTERVIEW: Swatch Brands See Record Sales In 2011
March 23 2011 - 1:34PM
Dow Jones News
The heads of two Swiss watch brands Wednesday forecast stronger
sales growth in 2011 despite the impact of the Japanese earthquake
and unrest in the Middle East.
Francois Thiebaud, president of Swatch Group's (UHR.VX) Tissot
brand said he expects total Swiss watch exports to beat the record
achieved in 2008.
"Swiss watch exports will be above the biggest peak of CHF17
billion we had in 2008, maybe even above 18 billion," Thiebaud told
Dow Jones Newswires in an interview here. "Watch exports could be
CHF17.5-18 billion, or even more."
He said Tissot, which sells watches in the CHF160 to CHF 1,700
range, had posted double-digit growth in the first two months of
2011.
"If I look at the Tissot, March should also be a good month. The
first quarter looks good and promising for the whole year," said
Thiebaud, who is also president of the Swiss exhibitors at the
Baselworld watch and jewelry show.
He said he expects a similar sales trend for the whole year
driven by recovering demand in Europe and North America, and
booming sales in Asia.
"There is a big demand for Swiss watches which we cannot meet
globally," Thiebaud said.
His confidence was echoed by fellow Swatch Group executive,
Walter von Kaenel, who is also president of Longines. He said 2010
"was just fantastic for the watch industry. Fantastic, it was
crazy. By all measures have been taken for 2011 to be better than
2010. It should be the best year of our history."
Von Kaenel said he expects the Japanese market to recover
rapidly from the recent earthquake and tsunami disaster, while
booming demand in the rest of the world could make up for any
downturn in Japan.
The Japanese market was traditionally the third biggest market
for Swiss watches behind the U.S. and Hong Kong, and had shown
signs of recovery from its recent slump, with Swiss watch imports
up 11.5% in the first two months of this year.
However, the recent disaster could curb spending on luxury
products as well as reduce the numbers of Japanese tourists, who
traditionally buy watches when they travel overseas.
"Knowing the Japanese, they will come back. Maybe it will take a
couple of months of low business or no business, but Japan always
recovers," said Von Kaenel.
All of Longines' Japanese customers had confirmed their
attendance at this year's Baselworld show, von Kaenel said.
"The main disaster is the human disaster. We are all affected.
It is something horrible," said Tissot's Thiebaud.
Watches which were set to be shipped to Japan may now go to
other markets, Thiebaud said, although it was too early to assess
the impact of the disaster on spending by Japanese tourists outside
the country.
"I am sure the Japanese will recover as soon as possible, and in
the next nine months sales may not be as bad as expected," Thiebaud
said.
Both executives were also positive about the Middle East.
Although sales into Libya and Egypt aren't particularly large,
other countries in the Middle East are significant markets for
companies including Swatch, Compagnie Financiere Richemont
SA(CFR.VX) and LVMH Moet Hennessy Louis Vuitton SA (MC.FR).
The United Arab Emirates is the seventh largest market for Swiss
watch exports, with exports to the country rising 32.3% in the
first two months of 2011, according to figures from the Federation
of the Swiss Watch Industry FH.
Other significant markets include Saudi Arabia, Qatar, Oman and
Kuwait, which all feature in the top 30 overseas markets for Swiss
watches.
Analysts have said all these markets could be hit by lower
tourist numbers in the wake of recent unrest.
"In the Middle East there are two key countries: Saudi Arabia
and UAE," Von Kaenel said. "If I look at the figures this year, we
have never had such a good February in Dubai as we had."
Saudi Arabia is a domestic market little affected by tourism and
had a good start to the year, while Dubai had received a lot of
Chinese and Russian tourists, he said
"It is too early to say, but I don't think there will be any
effect on the business," Von Kaenel said.
-By John Revill, Dow Jones Newswires; +41 43 443 8042 ;
john.revill@dowjones.com
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