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Swatch may struggle to better its 2011 figures after the company set record sales
Swatch may struggle to better its 2011 figures after the company set record sales

Swatch posts record sales; cuts supply by 15 per cent

Swatch Group announced record sales of $7.5 billion for 2011 and reduced sales of components to rivals by 15 per cent.
Sales were up 11 per cent from $6.8 billion in 2010 and the Swiss watchmaker warned it would be a major challenge in 2012 to improve on the already high sales figures.

Citing strong demand for its timepieces and jewellery, particularly from emerging markets such as China, the company said sales would have been higher if not for the weakened European economy and “catastrophic” strength of the Swiss economy, which reduced sales figures by 696 million francs.

Because most of the company’s products are sold abroad in dollars and euros, they are affected by exchange rate fluctuation.

Meanwhile, Swatch has moved another step closer to freeing itself from a long-standing requirement by the Swiss Competition Commission to sell watch components to smaller competitors.

As previously reported by Jeweller, Swatch has cut back its sales of mechanical movements and other components to competitors by a further 15 per cent. The company hopes for a further reduction this year and eventually a complete lifting of the supply requirement.

Swatch spokeswoman Beatrice Howald, told Associated Press that the company shouldn’t deliver to everyone and needed to ensure it had enough supplies for its own brands.

“The market now has several suppliers who could produce these movements,” Howald said. “We don’t want to be forced to deliver to everyone.”

However, smaller Swiss watch manufacturers have challenged the approval of the decision, arguing that without access to Swatch’s locally-manufactured components, smaller brands will be unable to keep their “Swiss made” label.

Peter Stas, co-owner of rival watch brand, Frederique Constant, told the Economic Times it would have been difficult to start watchmaking without access to Swatch’s production platform.

“A lot of companies will cease to exist while Swatch, the monopoly operator, will simply get stronger,” Stas said.

Swatch, which manufactures brands including Longines, Omega, Tissot and Breguet believe rivals should increase their spending on manufacturing, thereby strengthening the quality and competitiveness of the Swiss watch sector.

More reading:
Swatch trims watch supplies to rivals
Swatch steps up campaign to cut watch component supply

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