Swatch says French market difficult after terror attacks
Published 16/07/2016 | 02:30
Swatch Group, the world's largest watchmaker, warned investors that profit would at least halve in the first six months of the year after sales fell in Hong Kong and Europe, sending its shares sharply lower.
Swiss watchmakers are grappling with weak demand as fewer Chinese tourists shop in Hong Kong and Europe where they have been deterred by the fear of Islamist attacks.
A strong Swiss franc also pushes up the production cost for Swiss watches.
The deadly attack in the French city of Nice on Thursday night is expected to add to the pressure on luxury goods and travel companies.
"France looks difficult and is likely to stay difficult," Swatch Group chief executive Nick Hayek told Reuters.
"It is an important market. That is where tourists start their tours to most European countries."
Paris, hit by deadly Islamist attacks last November, is an important shopping destination for tourists, many from China, and the Swatch profit warning marked the start of what is likely to be a downbeat earnings season for the luxury industry.
"Nice is going to further hurt the sector. Tourists just won't want to come to Europe and particularly France during the summer," Kepler Cheuvreux analyst Jon Cox said.
Shares in Swatch, whose brands also include Omega and Longines, slid more than 12pc at one point, adding to a 17pc fall so far this year.
Overall net sales at Swatch are likely to have dropped around 12pc in the first half of 2016, the group said. (Reuters)