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Samba for the Swatch Group
Economy

Samba for the Swatch Group

Wednesday, 06 April 2016
By Janine Vuilleumier
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Janine Vuilleumier

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6 min read

What do Nick Hayek, sunglasses, the Rio Olympic Games, METAS and Universo have in common? Swatch Group’s traditional economic press conference, of course!

An air of festivity, or rather a holiday mood, reigned at the start of the meeting, as the group’s entire Board of Directors wore sunglasses from the new Swatch The Eyes collection, which the brand will be launching this spring. Last year the group teamed up with Italian company Safilo, specialists in spectacle design, to develop and distribute products which will soon be put on the market. Sales of between 30 and 50 million have been mooted for this new activity. Distribution will be via the Safilo network and Swatch boutiques.

The group’s entire Board of Directors wore sunglasses from the new Swatch The Eyes collection, which the brand will be launching this spring.
Lower profitability

In keeping with tradition, the conference began with a breakdown of figures. Nick Hayek, CEO of the group, emphasised the difficulties encountered in 2015, linked in particular to the strength of the Swiss franc. He regretted the lack of support for the Swiss economic fabric from the Swiss National Bank. Recording a decline of 3%, group sales amounted to CHF 8,451 million. Operating profit was CHF 1,451 million (-17.2%). Net profit meanwhile registered CHF 1,119 million (-21%).

Despite these declining figures, the group has continued to invest and develop. Around 100 new boutiques were opened last year, all brands considered. The group, which employed more than 36,000 people at the end of 2015, created approximately 700 new jobs last year. New production capacity was introduced, for example at watch hand and appliques maker Universo in La Chaux-de-Fonds, which consolidated all its affiliates under one roof. Rubattel & Weyermann, a specialist in dials, shares the same site. The buildings also house the Apprenticeship Centre for first-year apprentices studying engineering. A new foundry, located in La Chaux-de-Fonds, will assure the group’s metal casting activities.

METAS has its own office within the Omega complex from which it can control the process.

In 2015 the Swatch Group introduced a new certificate in partnership with METAS, the Swiss Federal Institute of Metrology. Christian Bock, its director, outlined the genesis of this development which, it should be noted, is open to all watchmaking firms. Seeking to develop a new standard for the anti-magnetic properties of its timepieces, Omega approached METAS two years ago. The Bienne firm wished to introduce watches that are resistant to 15,000 gauss, a level of magnetism 35,000 times greater than that emitted by the Earth (0.4). No such sophisticated measures existed hitherto. This meant starting from scratch with the development of all test procedures and the instruments required for their application, such as the giant magnet which bombards watches with this unprecedented level of magnetism. METAS has its own office within the Omega complex from which it can control the process. The institute sporadically checks timepieces and verifies the results obtained by Omega during tests. The Omega Globemaster, with its Co-Axial Master Chronometer movement, is accredited with this certification.

The group’s entire Board of Directors wore sunglasses from the new Swatch The Eyes collection, which the brand will be launching this spring.
Social projects for the Olympic Games

For more than 40 years, Renata, a subsidiary of the Swatch Group based in Itingen, has specialised in the manufacture of micro-batteries. CEO Stefan Pfrommer unveiled technological advances made by the firm, which works in a wide range of sectors including watchmaking, of course, but also the medical industry, payment systems, hearing aids, the new drones market, mobility (cycles, scooters), etc. New generations of button and ultra-thin batteries have been developed. The latter are the fruit of more than ten years of research and development and are intended mainly for applications in the fields of sport and medicine. To date, 90% of Swiss-made quartz watches are equipped with Renata batteries. In partnership with Belenos, another Swatch Group firm, Renata is developing a new generation of batteries with a 30% enhanced capacity.

For the Rio Olympic Games, Omega has organised twelve social projects, one a month, on behalf of the city.

The Rio Olympic Games will take place from 5th to 21st August this year. As always since 1932, Omega will be the official timekeeper. This year, the brand decided that the countdown should be different from other editions. Instead of ticking off 365 days to the opening of the Games on a giant clock, the Bienne firm organized twelve social projects, one a month, on behalf of the city. In collaboration with a local non-governmental organisation, VivaRio, Omega offers assistance to pregnant women, mothers, children and adolescents by providing support in such diverse areas as help to vulnerable people and a broad spectrum of educational provision (from early years to apprenticeship). These projects, which will continue to run after the Games, are supported by the brand’s entire family of ambassadors. Full details of this operation can be found on the website at www.omegavivario.com.

A topical subject, namely online commerce, was also raised. Marc Hayek, president of Jaquet Droz, Blancpain and Breguet, explained the group’s policy in this area. While entry-level brands are present on this market (Swatch, Tissot, Longines), high-end products, where customer service requires the personalized touch of a boutique, are not. Someone who buys an expensive timepiece must be able to touch it, try it, understand its functions, and be guided in every aspect of this type of purchase.

It will invest CHF 400 to 500 million in 2016, mainly in Switzerland.
5% to 10% growth in 2016

What about 2016? In recent years, the group has invested heavily in new production capacity. It will continue to do so this year, with constructions ongoing at Omega and Swatch, in Bienne. It will also continue to develop its worldwide points-of-sale network. Increasing its inventory of brands remains a priority, in particular Harry Winston, the latest addition to the group. The focus for this brand is not volume, but rather prestige. Harry Winston is a high-profile jewellery brand which buys and cuts the most beautiful stones on the planet. Its boutiques also occupy the most prestigious sites in the heart of the world’s great capitals. Tissot, for its part, will build on the partnership which it recently concluded with the National Basketball Association. The NBA enjoys outstanding international visibility, with offices in thirteen global markets, matches and programmes broadcast in 47 languages in 215 countries, as well as spin-off products available from more than 125,000 points of sale established in 100 countries on all six continents. In a word, an excellent showcase for the brand. For the current year, the Swatch Group is counting on sales growth of between 5 and 10% in local currencies. It will invest CHF 400 to 500 million in 2016, mainly in Switzerland.

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