BIEL, Switzerland – Nick Hayek, chief executive of Swatch Group, used his group’s annual media conference to launch a stinging attack on Switzerland’s national bank for allowing the Swiss franc to soar.
While other national banks had acted to protect their exporters and economies amid turbulent currency markets, “our national bank is a bit lost,” said Hayek. Swatch claimed the steady rise of the franc since 2010 had eroded more than 4 billion Swiss francs, or $4.1 billion at current exchange, from group revenues in the period.
Despite the challenging conditions, Hayek said Switzerland’s biggest watchmaker would maintain its pace of investment and store openings this year. Investment would match the 400 million to 500 million Swiss francs, or $406 million to $508 million, spent in 2015, while the group would add another 75 to 120 wholly owned retail outlets “according to opportunity,” he said. The precise number of new stores would depend on regional economic developments and projected tourist flows.
In 2015, Swatch Group opened 100 stores to its international network, taking sales through its own outlets to almost 30 percent of revenues, according to market estimates. Hayek said the group’s strategy remained to be vertically integrated. “We will not change that strategy. But of course, we will fine-tune it.”
He remained confident about this year, repeating his forecast that group sales would rise by more than 5 percent, in local currencies.
“I only have one worry: What will happen to the Swiss franc. That’s for me the biggest danger and problem. We can master everything else and grasp opportunities,” Hayek said.
Swatch Group is particularly exposed to the currency because of local content rules that require production to be based in Switzerland, and the implicit emphasis on “Swiss quality” in its marketing message. “The Swatch brand has suffered most from the strength of the franc because it’s competing with the Japanese, the Chinese,” Hayek acknowleged.
He focused on the group’s ability to innovate, highlighting its Renata and Belenos battery subsidiaries. He hinted that an electric vehicle using a revolutionary new battery technology developed by Belenos allowing much higher energy storage would be on the road in China by early next year.