Swiss watchmaker Swatch expects record sales this year as China reopens after Covid-19 and tourism resumes to boost sales in the region.
At constant exchange rates, net sales last year rose 4.6% year-on-year to 7.5 billion Swiss francs. Operating profit rose 13 percent to 1.16 billion Swiss francs ($1.3 billion), missing analysts’ forecast of 1.19 billion Swiss francs.
However, Swatch said sales in local currencies rose 25 percent in all regions except China, with the Covid-19 lockdown meaning a sales shortfall of more than CHF700 million.
“After the end of the Covid-19 measures, consumption recovered rapidly, not only in China, but also in the surrounding markets of Hong Kong Special Administrative Region and Macau,” Swatch said in a statement on Tuesday.
It added that the easing of travel restrictions in China would “reinvigorate sales in tourist destinations”, and said the increase in sales in China in January “reinforced the group’s aim to hit a record high in 2023”.
Beijing’s zero-epidemic strategy over the past three years has “seriously constrained” economic growth, the report said.
Swatch said it had “significantly” increased inventories, spending on raw materials, work in progress and semi-finished products in light of potential energy shortages and delivery bottlenecks.
“This measure will also work, considering China’s increased demand following the exit of the zero-epidemic strategy,” it said.
The company posted double-digit sales growth in Europe, the Americas, the Middle East and most of Asia, excluding China.
Swatch launched its MoonSwatch collaboration in March, a £207 plastic version of the Omega Speedmaster, prompting thousands of shoppers around the world to line up for it. Its sales reached 1 million.