Swatch Group sees key market Hong Kong as weak spot again in 2020
ZURICH (Reuters) - Swiss watchmaker Swatch Group <UHR.S> expects sales to fall further in key market Hong Kong this year after a marked drop in sales there spoilt the picture for the world's biggest watchmaker in 2019.
Swiss watch sales have underperformed other luxury goods as political protests shook Hong Kong, smartwatches took share from similarly priced Swiss watches and changes in distribution take their toll.
"Group management expects healthy growth in 2020 in all markets in local currency, with the exception of Hong Kong SAR. The currency situation will remain challenging," the company based in Biel in western Switzerland said in a statement on Thursday.
Net profit fell almost 14% to 748 million Swiss francs (588.18 million pounds) in 2019, while sales at constant currency dropped 1.8%, hit by a sharp decline in Hong Kong, where the group has over 90 retail stores, Swatch Group said.
The operating margin declined to 12.4%, from 13.6% a year ago. The company proposed to pay out an unchanged dividend of 8 francs per bearer share and 1.60 francs per registered share for 2019.
Swatch Group, with its cheap Swatch plastic watches, Tissot sports watches and high-end Omega timepieces, is doing less well than peer Richemont <CFR.S> because of its higher exposure to entry-price pieces that are under pressure from smartwatches, and weaker position in the fast-growing jewellery segment.
Richemont reported a 4% rise in sales in the quarter to Dec. 31, helped by double-digit growth in China and South Korea, which offset tumbling sales in Hong Kong and Japan.
(Reporting by Silke Koltrowitz; Editing by Michael Shields)
