PARIS — Swatch Group said net profits jumped 26 percent in 2012, beating market expectations, and it expects another year of healthy growth after a positive start to 2013.
The world’s largest watchmaker — parent of brands including Omega, Breguet, Blancpain and Swatch — posted net income of 1.61 billion Swiss francs, or $1.72 billion, in 2012 versus 1.28 billion Swiss francs, or $1.44 billion, the previous year. All dollar rates are calculated at average exchange rates for the period concerned.
“The 2013 financial year started well in January with continued healthy growth,” Swatch Group stated.
“The signals from the markets around the world clearly indicate continued healthy growth potential for the Swiss watch industry and the Swatch Group,” it said. “Against this backdrop, there is a realistic prospect of long-term growth in the Swiss watch industry of 5 to 10 percent per year.”
Swiss watch exports rose 12.6 percent between January and November 2012, according to the Federation of the Swiss Watch Industry, which is due to publish full-year results on Tuesday. Though demand has softened in key Asian markets, Chinese tourists are expected to continue underpinning European sales this year.
As previously reported, gross sales at Swatch Group rose 14 percent last year, breaching the barrier of 8 billion Swiss francs, or $8.5 billion, for the first time.
In its full results statement, the group said its operating profit margin rose by 150 basis points to 25.4 percent in 2012. This was sharply higher than forecast by Swiss private bank Vontobel, which earlier said it expected the margin to increase by 30 basis points to 24.2 percent.
The Swatch Group results come on the heels of disappointing data from rival Compagnie Financière Richemont. The parent of brands including Cartier and IWC reported last month that revenues in its fiscal third quarter rose 9.3 percent to 2.86 billion euros, or $3.72 billion, as sales in the Asia-Pacific region flattened out.
Thomas Chauvet, luxury analyst at Citi, maintained his “neutral” rating on Swatch Group shares.
In a research note, he pointed out that the company’s cash pile has been steadily decreasing due to higher inventories, the acquisition of small movements and components suppliers, purchases of raw materials and a personal loan to the chairman of Swatch group’s largest Asian customer, Hengdeli Holdings.
“The acquisition of Harry Winston jewelry brand for approximately $1 billion in January 2013 will put further pressure on cash flow this year,” Chauvet said.
“While management emphasized that this is a good use of ‘low-yielding cash,’ we are not fully convinced by the rationale of the Harry Winston deal, which will dilute margins/returns and require additional investments in sourcing, manufacturing, distribution and working capital,” he added.
Swatch Group shares closed up 5 percent at 543.50 Swiss francs, or $703.75.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast