LONDON — The clouds over the watch industry may be darkening, but Swatch Group expects some light to break through soon.

The owner of brands ranging from Harry Winston to Omega and Swatch saw net income sink 52 percent to 263 million Swiss francs, or $268.3 million, in the first half following a double-digit drop in sales, confirming its profit warning last Friday.

Group net sales were down 11.4 percent at reported currency and 12.5 percent at constant rates to 3.72 billion Swiss francs, or $3.79 billion. Watches and jewelry, which make up the bulk of group sales, saw a decline of 11.3 percent at reported rates, and 12.4 percent at constant ones.

Swatch cited a range of factors, most of which are industry-wide: The collapse of the high-end watch market in Hong Kong, the world’s number-one market for Swiss timepieces; fears of more terrorist attacks in Europe; the strong Swiss franc; changing tourist flows and shopping habits, as well as uncertainty around Brexit.

Unlike fellow hard luxury player Compagnie Financière Richemont SA, however, Swatch isn’t buying back inventory or dismantling it, nor is it laying people off. Swatch has a long-term industrial policy of keeping hold of staff and maintaining investments in new products and marketing in hard times. It has repeatedly said it’s willing to sacrifice short-term profit in return.

On Thursday the company called its sales performance “a respectable result in the given environment,” and pointed to a few bring spots, among them Harry Winston. The jeweler increased net sales in the high end thanks to its 36-strong retail network, Swatch said.

Mainland China stabilized in the first half, while Swatch believes the Hong Kong downturn has finally “bottomed out.”

Swatch shares were flat at the end of the day, closing at 51.15 Swiss francs, or $51.82.

The company issued its results around the same time the Federation of the Swiss Watch Industry unveiled their export figures, although the latter is struggling to find a silver lining in the second half. Exports of Swiss watches fell 16.1 percent in June, their sharpest monthly decrease so far this year, while sales to Hong Kong plummeted by almost 30 percent.

Exports totaled 1.63 billion Swiss francs, or $1.69 billion at average exchange rates for the month. In the first half, they were down 10.6 percent compared with the first six months of 2015.

“The forecast for 2016 has worsened significantly. Despite a potential very slight improvement of the situation in the second half, the year-on-year result is likely to show a downturn comparable to the figure recorded at present,” the federation said.

All key markets fell in June. Hong Kong receded 29.2 percent, marking its 17th consecutive month of declining sales. Italy was down 28.2 percent; Germany 15.4 percent; the United States 8.5 percent; China 6.5 percent; and Japan 4 percent.

The sales drop was reflected in all price categories. Watches priced between 200 Swiss francs and 500 Swiss francs, or $206 and $516, posted a 19.8 percent sales decrease in value terms. Watches priced above 3,000 Swiss francs, or $3,095, fell 19.5 percent. Timepieces priced between 500 Swiss francs and 3,000 Swiss francs fared relatively better, with a 6.5 percent decline.

In a research note following the export announcement, Thomas Chauvet of Citi expressed concern about the continued disruption in Hong Kong and Mainland China, three years into the Chinese government’s historic anti-corruption campaign, which has severely dented demand for high-end timepieces, and luxury goods in the region overall.

“Swiss watchmakers also depend on the health of global tourism, and with terrorist events in Europe and a stronger Japanese yen and U.S. dollar, tourist-related demand has been impacted,” Chauvet said in a research note.

Swatch’s chief executive officer, Nick Hayek, is bullish, however, about the second half. On Thursday the company said it is expecting growth to pick up in the second half in local currency terms, with year-end profits
 “closer or equivalent to” the previous year.

The company pointed to a “clear improvement” in Mainland China, with the first three weeks of July showing a “very positive development” compared to last year, especially in the luxury and prestige segment. Swatch Group’s Breguet, Blancpain, Omega and Longines brands were among the best performers in the early weeks of the second half.

The U.K. also saw a strong start to the half due to the pound weakening against all major currencies since the country voted to leave the European Union on June 23.

Swatch said that in the second half Italy, Spain and Great Britain are set to grow in local currency terms thanks to a revival in tourism, while France and Belgium will remain “difficult” due to the threat of terrorist attacks.

Mainland China is also set to grow, although third-party distributors in Hong Kong remain “uneasy,” and will cause further delays in reorders. In North America and Japan, growth in local currency will be achievable, according to Swatch.

Analysts remain skeptical.

Chauvet of Citi said that despite Swatch’s encouraging current trading comments, the bank believes consensus earnings forecasts need to come down by another 5 percent for the 2016 full year and by 10 percent in 2017 to reflect the “significant earnings miss” in the first half, uncertain demand outlook from third-party retailers, and Swatch’s limited ability to cut costs.

Luca Solca, managing director at Exane BNP Paribas, said Swatch could well get a boost in the second half from easier comparisons with the previous year; the fading impact of biometric visas, and the possibility that tourists might forget about the past year’s terrorist attacks, although that’s not likely. “Not really after what happened in Nice on July 14,” Solca said.

He and others believe the watch industry as a whole is shape-shifting, and the “froth” in the market is not bound to return.

“High-end consumers in China now have enough Swiss-made watches, Italian suits, French cosmetics, branded handbags,” said Solca, pointing out that watches are not replaced frequently, which will also hurt sales going forward.

He pointed to anti-corruption measures in China, a clogged wholesale channel, and the fact demand is now driven by middle-class consumers, who don’t necessarily buy high-end watches.

If that were not enough, 
“new technology is coming in to try and get a slice of the lower-end watch market. Swatch and its proprietary products seem at a disadvantage.” He suggested “prudence for what is to come in the next six months.”

Julian Easthope of Barclays said his team was more cautious than Hayek. They are forecasting Swatch Group revenue to be flat in the second half due partly to easier comparisons, and decline 6 percent in the year.

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