PPRUF - Swatch: The Luxury Watch Slowdown Risk (Rating Downgrade)

2024-05-23 13:20:16 ET

Summary

• That the luxury market is slowing down has been clear for some time now, but importantly, the luxury watch segment is seeing a sharper softening than the rest of the sector.
• This is significant for Swatch, which focuses on watches. It's also little wonder that the company's figures in H2 2023 were dismal leaving a question mark for growth in 2024.
• There's hope, however, considering its growing presence in the affordable watches segment with its namesake brand being a good example. A strong Swiss franc can still drag down growth, though.

When I last wrote about the Swiss watchmaker The Swatch Group AG ( OTCPK:SWGAY ) ( OTCPK:SWGAF ) in January, I was super bullish on it considering its robust performance in the first half of 2023 (H1 2023) despite a slowing luxury market. However, an anti-climax was right around the corner with a sharp drop in financial performance since, as the watches segment in particular has seen a drop. Unsurprisingly, its price has dropped by 13% since....

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