PARIS — Swatch Group said its sales growth slowed to single digits in the first six months of 2013, but it forecast a strong second half thanks to high-profile product launches and the continued integration of the Harry Winston brand.
The Biel, Switzerland-based group, whose 19 brands range from luxury Breguet timepieces to more affordable plastic Swatch watches, said first-half net profit rose 6.1 percent to 768 million Swiss francs, or $820.3 million. Currency conversions were made at average exchange rates for the periods to which they refer.
Gross sales rose 8.7 percent to 4.18 billion Swiss francs, or $4.46 billion, in the six months to June 30, compared with a 14.4 percent increase during the same period a year earlier. At constant exchange rates, revenues grew 7.7 percent in the first half.
“Positive growth in Swiss francs was once again recorded on every continent as compared with the very strong first-half 2012,” the world’s largest watchmaker said. “The outlook for the group remains very promising, and a strong second half-year is expected.”
Sales of watches and jewelry, which also include production activities, rose 9.1 percent to 4.04 billion Swiss francs, or $4.31 billion.
This compared with an overall 0.8 percent rise in Swiss watch exports in the first half, according to the latest data from the Federation of the Swiss Watch Industry. This was due largely to a sharp decrease in demand from China, where a government crackdown on gift giving has sharply dented sales of luxury goods.
Swatch did not provide specific guidance, but chief executive officer Nick Hayek was quoted as saying recently that the company might be able to achieve sales of 9 billion Swiss francs, or $9.52 billion at current exchange, in 2013.
Swatch Group noted that sales between September and December tend to be stronger than average because of the holiday and Christmas season.
Launches in the second half include what the company is billing as the world’s first antimagnetic watch, part of Omega’s Seamaster Aqua Terra collection, and Swatch’s Sistem51, a mechanical watch that will be priced between 100 and 200 Swiss francs, or $105 to $210.
“The continued integration of the Harry Winston brand will also make a significant contribution, as this brand has huge, almost untapped market potential in the high jewelry and watches activities,” Swatch Group said of the acquisition, which was completed on March 26.
Operating profit rose 0.8 percent to 910 million Swiss francs, or $972 million, while the operating margin decreased to 22.7 percent from 24.5 percent in the corresponding period last year.
The weak margin reflected Swatch Group’s investments, which included the first-ever Swatch stand at the Baselworld watch and jewelry fair and an automated production line for the Sistem51, due to be launched in the fall.
In addition to the acquisition of Harry Winston for an enterprise value of $1 billion, the group invested 295 million Swiss francs, or $315 million, in its distribution network and production, including machinery and equipment for factories in Switzerland.
At Harry Winston, it has settled all debts, broadened the equity capital base and increased inventory. In May, it paid $26.7 million at auction for a 101.73-carat, pear-shaped diamond and named it the Winston Legacy.
“The Harry Winston brand also has an extremely large and almost untapped potential in the watch sector, which the group now aims to expand further using its experience around the world. The necessary funds will also be invested into this activity,” Swatch Group said.
Société Générale, which has a “buy” rating on Swatch Group shares, said in a research note it expected full-year sales to grow by double digits, thanks to easier comparisons in the second half and a greater contribution from Harry Winston.
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye